NEW YORK (AP) — Target took a big hit from higher costs during the first quarter despite brisk sales.
Profits for major retailers has come under pressure from both surging inflation and stubborn clogs in the global supply chain.
Target's net income fell roughly 52% from a year ago to $1.01 billion, or $2.16 per share, in the quarter that ended April 30. Per-share earnings adjusted for one time costs were $2.19, far from Wall Street projections of $3.07 a share expected by industry analysts polled by FactSet.
That compares to $2.09 billion, or $4.17 per share, in the year-ago period.
“Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time," Target CEO Brian Cornell said in a statement accompanying the earnings report.
Revenue rose 4% to $24.83 billon in the quarter. Analysts had expected $24.48 billion.
Sales at Target stores open at least a year increased 3.4% during the latest quarter. It posted an 18% increase in the same quarter last year. Online sales increased 3.2%, following growth of 50.2%. Same-day services including picking up online orders curbside increased 8% this year. More than 95% of Target’s first quarter sales were fulfilled by its stores.
Sales growth was driven by items that shoppers frequently purchase like food and beverages, beauty and household essentials.
During a media call with reporters on Tuesday, executives with the Minneapolis company said that customers remain financially healthy but they are switching up their buying as they become more social. For example, instead of buying TVs, they're buying luggage as they travel more.