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- Despite customers shifting their spending patterns due to inflation, Target's quarterly profits were stronger than predicted.
- Demand was particularly high for the company's "frequency businesses," which include cosmetics, snacks, and cleaning supplies.
- Target stock rose 2.6% on Wednesday after the company reported profits.
Despite inflation causing shoppers to shift away from more expensive discretionary goods in favor of cheaper ones, Target (TGT) reported quarterly profits that above expectations.
The company's earnings per share (EPS) of $2.05 blew beyond Wall Street's expectations. The 0.6% growth in revenue to $25.32 billion was slightly beyond projections. The combined total of in-store and online transactions, known as "comparable store sales," remained flat year-over-year despite an increase in the former (+0.7%) and a decrease in the latter (-3.4%).
Demand was particularly high for the company's "frequency businesses," which include cosmetics, snacks, and cleaning supplies. It also reduced stock by 16% from 2022 levels.
According to CEO Brian Cornell, Target entered 2023 "clear-eyed about the challenges consumers are facing," and as a result, the company is putting more emphasis on "value and product categories our guests need most right now."
Target maintained its previous full-year forecast for comparable store sales in the low single digit percentage range and earnings per share in the $7.75 to $8.75 range.
Cornell said that he expects "shrink" to cut the company's earnings by more than $500 million this year due to theft. He also said Target was making "significant investments in strategies" to stop theft and safeguard workers and consumers.
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