The Silver Lining in Target's Ugly Quarter
There's no question that Target's (NYSE: TGT) second-quarter results left a lot to be desired.
The retail giant's profits plunged as poor inventory planning led to aggressive markdowns in discretionary categories. Target had indicated that the bottom line would take a hit as it made the decision to clear inventory, but the bite to profits was worse than expected.
In June, management had said it expected 2% operating margin in the second quarter, but instead, Target reported just 1.2% operating margin, way down from the 9.8% it reported in Q2 2021. A steep decline in gross margin, which fell from 30.4% to 21.5% primarily due to efforts to clear inventory, was the main reason for the operating margin drop.
Source Fool.com
