On August 16th Target Corporation (TGT) posted results for Q2 of FY2023 ending July 29th. For the quarter, the Company earned $835 million on revenue of $24,773 million with a diluted EPS of $1.80. For the corresponding Q2 of FY2022, ending July 2nd Target earned $183 million on sales of $26,037 million with a diluted EPS of $0.39. Revenue was 4.9 percent higher but this was a miss against consensus projections due in part to reduced spending by consumers and backlash over Pride merchandise. For Q2 gross margin was up 24.8 percent over Q2, 2022 to 28.2 percent. Operating margin was up 273 percent to 4.8 percent. Net margin was up 371 percent to 3.3 percent.
In commenting on results Brian Cornell Chairman and CEO stated “Our second quarter financial results clearly demonstrate the agility of our team and the resilience of our business model, as we saw better-than-expected profitability in the face of softer-than-expected sales. With the benefit of a much-leaner inventory position than a year ago, the team was able to quickly respond to rapidly-changing topline trends throughout the second quarter, while continuing to focus on the guest experience."
Cornell added "As we move into the Fall, the team is gearing up for the biggest seasons of the year, with a focus on continuing to serve our guests with newness throughout our assortment. At the same time, we continue to take a cautious approach to planning our business, and have therefore adjusted our financial guidance in anticipation of continued near-term challenges on the topline. This approach, along with the long-term investments we're making in our business and strategy, position us to deliver sustainable, profitable growth in the years ahead."
The Company release included guidance, “For fiscal 2023, the Company expects a low-to mid-single digit decline for the remainder of 2023 and an adjusted EPS will range from $7.00 to $8.00”.
Comparable same-store sales declined by 4.5 percent compared to Q2 FY 2022. Same-day services (Shipt and pick-up)increased by four percent. Stores generated 83.1 percent of sales with 16.9 percent originated digitally, down from 17.9 percent in Q2 FY 2022.
At the end of Q2, Target Corporation operated 1,955 stores with a total retail area of 245,346. square feet. The company invested $5,528 million in property and equipment during fiscal 2022.
On July 29th Target posted total assets of $53,206 million, down 0.3 percent from January 28th at the end of FY2022. Long-term debt and lease obligations attained $19,550 million. Target Corporation had an intraday market capitalization of $59,430 million on August 17th.
Target trades with a forward P/E of 16.9. The Company has traded over the past fifty-two weeks in a range of $124.96 to $132.85 with a 50-day moving average of $132.19. On August 16th the share closed at $125.03 but after the release on August 17th TGT closed at $130.11.
Twelve-month trailing operating margin was 3.6 percent and profit margin 2.5 percent. The Company generated a return on assets of 4.8 percent and 24.3 percent on equity.