On Wednesday, Target shares (NYSE: TGT) plunged after reporting dismal earnings result on Tuesday for the fiscal fourth quarter, this was weighed down by another lower-than-expected outlook for first quarter and full year 2017.
TGT plummeted 12.17% or $8.14, to $58.77 per share at the market’s close on Tuesday. Prior to the earnings report, Target’s stock was moving at an upward trend at $66.91 per share.
Ahead of the earnings report on Tuesday, Target Corp. already lowered its outlook for the fourth quarter results, saying its stores saw weak sales during the holiday season in 2016; however, Target posted even lower results which altogether disappointed the market.
For the fourth quarter earnings, the retail company posted revenues at $20.69 billion, which was short from the $20.7 billion forecast and 4.3% down year-over-year, which was then $21.63 billion. According to Target, the weak results came in after it decided to remove pharmacy and clinic sales from the results, as well as a 1.5% drop in comparable store sales.
Meanwhile, the fourth quarter net earnings disappointed investors most as it fell 42.7% to $817 million, with earnings per share of $1.45 and lower by 37.6% from a year ago. The EPS was 5 cents lower from forecasts. Target attributes low sales to stronger sales from ecommerce giants like Amazon
“Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores. We will accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years,” Target CEO Brian Cornell stated after the dismal report.
Target gave a more modest outlook for the first quarter for 2017, given the challenges it experienced from the past year. According to Target, they are expecting a low to mid range of single digit decline for comparable store sales, with earnings of $0.80 to $1.00 per share.
The retail company promised new investments and brands to improve sales for 2017, while also stating that they will lower prices in order to keep up its competitors like Walmart.
Included on Target’s new strategies to recover better sales for 2017, the retail company said it will refurbish around 600 stores and open 100 smaller branches situated in cities and college campuses, target to be opened by 2019.
“Our plan right now is to make sure we don’t take our eyes off of the importance of quality, design and innovation in our stores and with our brands, but we also need to make sure we’re continuing to deliver the value the guest is looking for,” Cornell assured investors. Despite new strategies to regain customer appeal, Target promised that loyal customers will still see the trademark cheap chic style that the company is well-known for.
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