Target’s profit plunged 52% last quarter. That’s not the only bad news.
Sales at Target’s stores fell 5% in the second quarter, the latest quarter that has been particularly bad for the retailer, its latest quarter reported on Saturday showed.
Target has been struggling for years to regain the health of its core business, which includes food and fashion stores. The company posted a loss of $1.1 billion for the quarter, the worst in its history.
Target shares have slumped nearly 15% this year. The stock closed down 3.3% at $50.57 and is down 19% so far this year.
Target’s share prices have sunk because investors see the company’s best years are behind it. Analysts expect Target to lose $1 billion in the third quarter, according to FactSet.
Target will reveal its third-quarter earnings results on Thursday, and investors will be watching whether Chief Executive Brian Cornell can salvage the company from the depths he dug for himself.
“The turnaround story has gotten more and more difficult,” said Patrick Seitz, director of retail investing at LPL Financial.
“It’s not the best story by far, but it’s not a bad story,” he said.
Target’s earnings decline can largely be attributed to a dramatic slowdown in sales at its discount fashion department, which accounts for most of its business.
Sales at the department plunged 29% in the second quarter. Target blamed the decline on reduced online advertising of the dresses and clothing it sells, as well as the fact that shoppers increasingly are sticking with larger-sized clothing and shoes instead of focusing on the smaller sizes at a Target store.
The company also acknowledged it will miss forecast adjusted profit for the first time in three years in the third quarter. The third-quarter forecast will show that Target’s unadjusted earnings will be in the red for a third straight year.
Target, the largest apparel retailer in the U.S., reported a first-quarter profit that was in line with expectations. The results were the seventh consecutive quarter of a profit beat.
“The third quarter should be solid. The fourth quarter should be better,” said James Paulsen, an equity analyst at Morningstar.
The shares of parent company The Target Corporation
