Target’s stock surges as lower markdowns and shrink costs fueled big profit beat

by | Mar 5, 2024 | Stock Market

Shares of Target Corp. shot up toward an 11-month high Tuesday, after the discount retailer reported fiscal fourth-quarter profit that was well above expectations, as lower markdowns and lower shrink costs boosted margins. The company said maintaining “appropriate inventory levels” helped increase profitability, as it resulted in lower markdown rates, stronger in-stock measures and reduced inventory-related costs.

The stock
TGT,
-3.09%
surged 8.5% in premarket trading, which puts it on track to open at the highest price seen since April 25, 2023. The stock is also heading for the biggest one-day gain since it soared 17.8% on Nov. 15, when the company reported third-quarter results. Net income for the quarter to Feb. 3 rose to $1.38 billion, or $2.98 a share, from $876 million, or $1.89 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of $2.98 beat the FactSet consensus of $2.42. Gross margin improved to 25.6% from 22.7%, to reflect lower markdowns and other inventory-related costs, lower freight costs and lower supply-chain and digital fulfillment costs. BMO Capital analyst Kelly Bania said gross margin came in more than one percentage point above expectations. The company said shrink costs were also lower than last year, as continued increases in loss rates were offset by the timing of inventory accruals. The value of inventory held at quarter end dropped 11.9% to $11.89 billion. Total revenue gr …

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[mwai_chat context=”Let’s have a discussion about this article:nnShares of Target Corp. shot up toward an 11-month high Tuesday, after the discount retailer reported fiscal fourth-quarter profit that was well above expectations, as lower markdowns and lower shrink costs boosted margins. The company said maintaining “appropriate inventory levels” helped increase profitability, as it resulted in lower markdown rates, stronger in-stock measures and reduced inventory-related costs.

The stock
TGT,
-3.09%
surged 8.5% in premarket trading, which puts it on track to open at the highest price seen since April 25, 2023. The stock is also heading for the biggest one-day gain since it soared 17.8% on Nov. 15, when the company reported third-quarter results. Net income for the quarter to Feb. 3 rose to $1.38 billion, or $2.98 a share, from $876 million, or $1.89 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of $2.98 beat the FactSet consensus of $2.42. Gross margin improved to 25.6% from 22.7%, to reflect lower markdowns and other inventory-related costs, lower freight costs and lower supply-chain and digital fulfillment costs. BMO Capital analyst Kelly Bania said gross margin came in more than one percentage point above expectations. The company said shrink costs were also lower than last year, as continued increases in loss rates were offset by the timing of inventory accruals. The value of inventory held at quarter end dropped 11.9% to $11.89 billion. Total revenue gr …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]

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