Target Corporation Reports Mixed Q4 Earnings & 2017 Guidance That Misses Expectations By A Mile

Written by StockNews.com

Target Corporation (NYSE: TGT) saw its shares plummet to their lowest levels in years in early trading Tuesday [Feb 28, 2017 | 6:42am], after reporting mixed fourth quarter earnings results and offering full-year guidance that missed expectations by a mile.

The Minneapolis-based retail giant reported adjusted Q4 EPS of $1.45, which was $0.06 worse than the Wall Street consensus estimate of $1.51.

Revenues fell 4.3% from last year to $20.69 billion, matching analysts’ view of $20.69.

Comparable store sales (“comps”) fell 1.5% from last year, while comparable digital channel sales jumped 34%.

The real story in Target’s report, however, was its disastrous earnings guidance. Looking ahead, the company forecast Q1 EPS of $0.80-1.00, sharply lower than the $1.33 per share that Wall Street projects.

For the full year 2017, Target sees EPS of $3.80-4.20, also significantly below analysts’ view of $5.33.

TGT noted that its 2017 guidance reflects the impact of its “new financial model,” which the company said it would discuss in greater detail later today.

The company provided some preliminary detail on the new plan via press release:

“Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores,” said Brian Cornell, chairman and CEO of Target. “At our meeting with the financial community this morning, we will provide detail on the meaningful investments we’re making in our business and financial model which will position Target for long-term, sustainable growth in this new era in retail. 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. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day. While the transition to this new model will present headwinds to our sales and profit performance in the short term, we are confident that these changes will best-position Target for continued success over the long term.”

...Year-to-date, TGT had declined -6.51% prior to today’s report, versus a 6.08% rise in the benchmark S&P 500 index during the same period.

TGT currently has a StockNews.com POWR Rating of C (Neutral), and is ranked #14 of 21 stocks in the Grocery/Big Box Retailers category.