On August 17th Target Corporation (TGT) posted results for the second quarter of FY2022 ending July 30th. For the quarter, the company earned $183 million on revenue of $26,037 million with a diluted EPS of $0.39. For the corresponding second quarter of FY2021, Target earned $1,817 million on revenue of $24,826 million with a diluted EPS of $3.65. Revenue was 3.5 percent higher but net earnings declined by 89.9 percent. Gross margin for the second quarter of FY2022 declined 28 percent to 22.6 percent compared to 31.3 percent in the second quarter of FY2021 This deterioration was attributed to lower selling prices to clear excess stock and higher cost of goods sold in an inflationary environment. Concurrently operating margin fell 87 percent from 9.8 percent in the second quarter of FY2021 to 1.2 percent for the most recent quarter due in part to higher freight and transport, wages and utilities.
In commenting on results Brian Cornell Chairman and CEO stated “I'm really pleased with the underlying performance of our business, which continues to grow traffic and sales while delivering broad-based unit-share gains in a very challenging environment. Addressing disposal of excess stock imported in anticipation of continued delays in the supply chain Cornell noted, "I want to thank our team for their tireless work to deliver on the inventory-rightsizing goals we announced in June. While these inventory actions put significant pressure on our near-term profitability, we're confident this was the right long-term decision in support of our guests, our team and our business”.
He concluded, “Looking ahead, the team is energized and ready to serve our guests in the back half of the year, with a safe, clean, uncluttered shopping experience, compelling value across every category, and a fresh assortment to serve our guests' wants and needs."
Guidance included, “For fiscal year 2022, the Company continues to expect low-to mid-single digit revenue growth and an operating margin rate centered on six percent”.
Comparable same-store sales growth attained 2.6 percent in comparison with the second quarter FY2021 value of 8.9 percent that represented a post-COVID rebound. Traffic grew at 2.7 percent and digital sales 9.0 percent compared to the second quarter of FY2021.
On July 30th Target posted total assets of $52,470 million, down 2.5 percent from January 29th 2022. Long-term debt and lease obligations attained $17,571 million. Target Corporation had an intraday market capitalization of $80,400 million on August 17th. The Company has traded over the past fifty-two weeks in a range of $137.16 to $268.98 with a 50-day moving average of $154.07. TGT trades with a forward P/E of 19.6. On August 16th the share closed at $180.18 but after the morning release on August 17th TGT opened at $175.37.
Twelve-month trailing operating margin was 7.5 percent and profit margin 5.5 percent. The Company generated a return on assets of 9.9 percent and 45.5 percent on equity.
At the end of FY2021, Target Corporation operated 1,926 stores with a total retail area of 243,284 square feet. The company invested $3,544 million in property and equipment during fiscal 2021 and has continued the store upgrade program.