Target Plunges 12% After Missing Lowest EPS Estimate, Slashing Outlook

Don’t worry. Don’t pay attention to the real results of real retailers. Ignore the 100 stores being closed by Macy’s. Ignore the 150 stores being closed by JC Penney. Ignore the 150 stores being closed by Sears and their imminent bankruptcy. The mainstream media says consumer confidence has never been higher. All is well in their propaganda fantasy world. 

Tyler Durden's picture

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%

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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.”

Cornell concluded that while he is confident the proposed changes will best-position Target for continued success over the long term “the transition to this new model will present headwinds to our sales and profit performance in the short term.”

In other words, expect more of the same from America’s biggest retailers who are now stuck in a fight for market share, even as prices continue to decline, forcing CFOs to come up with increasingly more innovative ways of preserving margins and profits.

At last check, TGT was trading 12% lower after the earnings, wiping out $4 billion in market cap and weighing in on peers such as Walmart.

 

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TrickleUpPolitics
TrickleUpPolitics

I used to love shopping at Target, but I stopped as soon as they went with the transgender bathroom BS. I have to confess that it warms the cockles of my heart to see Target struggling after it flipped the bird to flyover country.

harry p.
harry p.
hardscrabble farmer

And absolutely none of Target’s losses could possibly be blamed on the colossal failure of their security protocols that led to 110 million customers having their credit card information hacked, their insane bathroom policy that affected 99.9% of their customers adversely in order to placate .01% or their commitment to advertisements like this-

comment image

Whoever is steering the Target ship is either the most incompetent administrator to even stand at the helm, or it is deliberate.

Dutchman
Dutchman

Seat sniffers?

Rdawg
Rdawg

Don’t forget Target’s ban on concealed carry in their stores.

ILuvCO2
ILuvCO2

Hey, isn’t that Neil and Bob ?

TampaRed
TampaRed

sweet smiles-

rhs jr
rhs jr

Their NWO CEOs made themselves The Target of sane Americans and I bet a gross of donuts that they are still proud of themselves as they fool around in their restrooms…

Zarathustra

I got caught up in the credit card hack. It didn’t cost me anything except some inconvenience, but the few times I’ve been back, I’ve paid with cash.

Anonymous
Anonymous

I quit shopping at Target back when they went anti-Christian by banning the Salvation Army at Christmas so they wouldn’t upset the non Christians.

I even wrote them and told them what and why I was doing it, they apparently didn’t care since I received no response.

This bathroom stuff is just a continuation of that policy and has apparently either alienated substantially more of their customers or has become the final straw for those still hanging on but not liking their leftist policies. It seems to have pushed them to action.

Still, it’s their company and their management and shareholders can do with it as they please, and I and others like me can shop elsewhere as we please too if we don’t like it.

hardscrabble farmer

I think companies should be allowed to do whatever they like including catering to a demographic that is proportionally smaller than the market they would enjoy if they didn’t. With that kind of choice comes the equally free choice of customers to go elsewhere. Do you want 100% of 2% or 20% of 100%? Maybe they thought normal families would just continue to go along with whatever agenda these folks seem hell bent on promoting and it wouldn’t cost them anything.

The hack part is another willful part of their decline in market share because they CHOSE to ignore security protocols that would have prevented the loss. They did a cost-benefit analysis that said it was more profitable to allow their customer data to be compromised than to protect it. Or they didn’t and just said screw it, we don’t care about the customers. Either way, it hurt them significantly and their attempts to fix it were almost as hamfisted as their initial denial.

I simply can’t tell with Target.

It seems to me that whoever is in the position to lead the company has either chosen to acquiesce to social justice types within the corporate structure deliberately or is tanking the company intentionally with a motive that is unknown. I think the economic situation is the least of these three problems.

B Lever
B Lever

Retailers are feeling the sting of money shifted from them to healthcare premiums. American families spend 30-40% of household income on housing and 20-30% of their income on healthcare premiums. Food and gas takes up most of the remaining $$$.

Maybe the homos can keep Target’s doors open, I really don’t care.

Suzanna
Suzanna

B, 20 thumbs. I was never a Target shopper…expensive China junk.

hardscrabble farmer

Brian Cornell, raised in a single parent (Mommy) household, champion of LGBT.

Target CEO Brian Cornell told Fortune magazine on Wednesday that the retail chain’s decision to allow transgender customers and staff to use the bathroom that most closely corresponds with their gender identity hasn’t hurt sales.

“To date we have not seen a material or measurable impact on our business,” Cornell said.

Says that “damp weather and a skittish consumer” were the big factors in their steady erosion of stock value (now at 2012 levels).

He must have a very special ability to discern what it is that keeps people out of the stores.

Suzanna
Suzanna

HSF,
First, people have a new barrier to recreational shopping,
money. They do not have the $ for new placements and
waste baskets. Second, their support for NWO agendas
are offensive. If I were a young mother I would shun their
store instinctively.

Ed
Ed

Tyler’s wringing the last drop out of every Reuters report he can find. Ever wonder why almost everything on ZH is clipped from Reuters or some other msm source? I used to wonder, but I think I know why now.

TampaRed
TampaRed

why?

TC
TC

We used to do most of our grocery shopping at the Target near our house. Not anymore, for all the reasons listed above. That’s ~ $4k a year they stopped getting from us. My wife loathes going to Walmart, but that’s where we do most of our shopping now. Fuck Target with a rusty chainsaw.

NickelthroweR
NickelthroweR

Greetings,

I had no option but to go to Target yesterday because it was the closest place a friend of mine could go to pick up a needed prescription. Because the CVS pharmacy that is in Target is staffed by dolts, we had to wait 45 minutes for someone to pull a prepackaged eyewash from off of the shelf. This gave me plenty of time to wander around Target and have a look as I generally avoid such places especially Target.

My observations:
First, the only lines in the entire Super Target were at the Pharmacy and the sh*tty pizza stand. The store had more than a dozen registers but only two were open and, mind you, this was at 6:30pm when a place like that should be full. I didn’t see anyone have to wait for a register.

Second, I did not see people pushing shopping carts but instead rushing around with only an item or two in their hands. Entire departments were empty with not a single customer in it. I saw no one in the electronics section, housewares, children’s clothing or men’s clothing.

Third, it would appear that Target sells cell phones and cell phone plans because there was a lot of retail space dedicated to it. I’m not sure how I would sign up for one of those amazing plans because I didn’t see anyone working in that department. Come to think of it, I saw very few employees and they all seemed to be in a big hurry to go no where.

I do not see how that particular operation is in any way profitable.

travis
travis

I used to shop there before the restroom situation became deplorable. I can drive 15 to 30 seconds longer and shop elsewhere. Walmart for chinese junk or price chopper for food. Seconds further. Seconds.fuck you target. Enjoy your agenda.

Anon
Anon

That CEO Cornell is just another ivory tower observer that looks down from “on high” once in a while, but really has no clue what he is actually looking at. Like most women and male sheeple that lift the hood of a car when there is a problem. They look down, scratch their head, and then say something just to appear they aren’t totally out of their league.
How much you want to bet that Brian has never actually been to any middle American home in YEARS, and has no idea what it is like to actually shop in a place whose parking area is not littered with Land Rovers, BMW’s and Mercedes Benz’? Maybe Brian Cornell aught to have lunch with Sears Holdings’ Eddie Lampert, and they can compare notes on who can shit can a brand faster?

Other annon
Other annon

Big Mike said he snuck out of the W H to shop at Target………..

mangledman
mangledman

I think target and k Mart had a negative porn thingy first hardcore xxx low where we didn’t want kids near magazine racks. Then they banned all toy gun sales. I refused to darken doorstep after that. Iwas back once a long time ago, but that was under duress. I think I threw a big enough fit that Mrs. Hasn’t considered draggin me back since. I remember both times negatively affected stock but they didn’t learn. Swords sharp and powder dry.

Mark
Mark

I spent 7 years at Target in management in the late 80’s early 90’s that brought me to their HQ in Minneapolis a dozen trips.

Mostly hard corps raging PC liberals steering the Operations ship then. It was a retail machine and was good to me but I witnessed serious reverse discrimination in what I thought was too many promotions as many white males were passed over for what I came to call: Diversity/Perversity.

I once had a discussion with a female HR Director on firing a subordinate (who had a black sounding name). After I presented my well documented reasons for asking her needed permission she demurred and wanted me to just do yet another “final warning” then when she realized the slug I was fed up with was white and then confirmed he was under 40…I’ll never forget what she said (this was 1989)

“Oh…under forty and white…go ahead and fire him! Its open season on under 40 white guys.”

She was white as I’m I…I was 39 then…and made a mental note to stay out of trouble the rest of the year.

True story.

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