On Tuesday, Target Corp stated that the profit of the third quarter has missed the estimates.
Just ahead of the critical holiday season, the worries of the investors included the investments in the online business, increase in the inventories along with the increased wages in a very tight labor market and the price cuts which is hurting the margin.
When the retailer, Target reported of the missed sales expectations, the shares of the company decreased by 1.5 percent.
The performance of the third quarter of the company was in a contrast with its rivals Walmart Inc and Mary’s Inc. both of these retailers have elevated their forecast for the current fiscal year.
This was because of the a strong economy which had boosted the spending capacity of the consumers.
The Chief Executive Officer, Brian Cornell addressed the margin pressures in a conference call. He stated that the efforts of the company to boost the growth require a commitment of the resources.
He further added that this explains the reason why he has used the word “investment” about five times in the remarks made by him.
The comments of Cornell, however were not taken well by the Wall Street.
The Vice President of the TradeStation, David Russell which is the fifth largest digital trading platform in the United States stated that for the Target this is becoming a margin story.
David further added that despite the investments, the Wall Street was expecting a better margin from the Target.
According to the analysts, the inventories had a weighing on the stock. The analyst of the Cowen, Oliver Chen stated that the Target increased 17.8 percent year over year compared to the growth of the sales which was just 5.3 percent.
This in turn had implied a negative sales to inventory spread by 12.2 percent.
Source: Reuters, TheGlobeAnd TheMail
