What the Target Guidance Cut Really Means
Target (NYSE: TGT) spooked the market again on Tuesday. Three weeks after the big-box chain provided a dismal first-quarter earnings report, Target said it would accelerate markdowns to right-size its inventory as it struggles with a normalizing economy following the pandemic.
The retailer said consumer staples categories like grocery and health and beauty remain strong while discretionary categories like home goods are suffering. After two years of stocking up on things like home furnishings, consumers now appear to be shifting their spending back to services like travel and restaurants.
In its updated guidance, Target now expects an operating margin of just 2% for the second quarter, which compares to guidance just a few weeks ago of an operating margin in the range of 5.3%. In the second half of the year, Target expects its operating margin to return to 6%, which it said was better than historical levels before the pandemic. Management offered revenue growth guidance in the low- to mid-single digits and said it expected to maintain or gain market share.
Source Fool.com
