Target Plunges 12% After Missing Lowest EPS Estimate, Slashing Outlook…(How’s That “Transgender” Bathroom Thing Working Out For ‘Ya!?)

Tuesday, February 28, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Feb 28, 2017

When we discussed yesterday Reuters’ report that Wal-Mart is now actively “price testing” its products, and squeezing vendors in a scramble to preserve market share while keeping margins relatively flat, we cautioned that this is the latest indication of what appears to be a pervasive “deflationary shock” among the retail industry which is caught in a vicious fight for market share. This morning’s results from Target validated this observation: moments ago the retail giant reported Q4 EPS of $1.45, missing both consensus ($1.51) and the lowest Wall Street estimate ($1.47), even as Q4 revenue came largely in line with expectations of $20.7 billion, suggesting that holiday spending was indeed far worse

The internals were just as messy, with Target reporting comp sales of -1.5%, missing the -1.3% estimate, on gross margin of 26.9%

But the most troubling part of the release was the company’s disappointing guidance: Target now sees 1Q adj. EPS of 80c to $1.00, far below the consensus estimate $1.33, and also over 20% below the lowest firecast (range $1.26-$1.41). The bleeding is expected to continue on the back of a “Low-to-Mid Single Digit Decline” in comp store sales in both Q1 and the full year. Also, for the full year, Target sees adj. EPS of $3.80 to $4.20, wildly missing consensus of $5.34 (range $5.05-$5.60).

CEO Brian Cornell was rather downbeat: “Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores. At our meeting with the financial community this morning, we will provide detail on the meaningful investments we’re making in our business and financial model which will position Target for long-term, sustainable growth in this new era in retail. We will accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day.”

The Rest…HERE

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