Target earnings fall short as supply chain struggles persist

Comp sales growth offset by freight and supply chain costs

Target's net profit more than halved year-over-year despite sales growth (Photo: Target)

The conventional wisdom among Wall Street analysts was that shoppers would return to stores and drive bounce-back quarters for big box retailers in Q1 2022. But amid continuing supply chain struggles, only the first half of that assumption has held true.

Target Corp. (NYSE: TGT) reported Q1 2022 earnings before the bell Wednesday that revealed strong sales growth but dwindling profits. The retailer missed sharply on earnings per share, much like competitor Walmart (NYSE: WMT), which reported earnings the day before. Shares of Target stock were down more than 20% in premarket trading Wednesday.

Looking only at Target’s sales figures paints a deceptively rosy picture. Comparable sales — those that come from stores open at least 13 months or from online — grew 3.3% in the quarter, comfortably beating Wall Street’s estimate of 0.8%, per StreetAccount. Both in-store and digital comparable sales grew at a similar rate.


Watch: Will return to in-person shopping thwart e-commerce?


“Our first-quarter results mark Target’s 20th consecutive quarter of sales growth, with comp sales growing more than 3% on top of a 23% increase one year ago,” said Target CEO Brian Cornell in a prepared statement. “Guests continue to depend on Target for our broad and affordable product assortment, as reflected in Q1 guest traffic growth of nearly 4%.”

Yet those strong sales numbers delivered a weak quarter. Target’s adjusted earnings per share of $2.19 fell far short of analyst expectations for $3.07, marking a 40.7% decline year-over-year. Operating income margin rate of 5.3%, meanwhile, was much lower than the big box retailer itself anticipated. Net profit for Q1 was slashed by more than half (52%).

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    Jack Daleo

    Jack Daleo is a staff writer for Flying Magazine covering advanced air mobility, including everything from drones to unmanned aircraft systems to space travel — and a whole lot more. He spent close to two years reporting on drone delivery for FreightWaves, covering the biggest news and developments in the space and connecting with industry executives and experts. Jack is also a basketball aficionado, a frequent traveler and a lover of all things logistics.