Amid warnings, Walmart missed target on earnings after beat showings

target (TGT) met earnings expectations Wednesday, with the retail giant guiding for the second half of the year after cutting guidance in June, despite missing earnings views. TGT’s financial report comes a day later Walmart (WMT) beat low revenue and sales forecasts. DGT shares were lower on Wednesday morning.




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Target revenue

Assessments: Wall Street forecast target earnings of 79 cents per share on sales of $26 billion. Same-store sales were forecast to be around 3%.

Results: Target 39 cents per share, down 89% year-over-year. The company reported a 3% increase in revenue in the second quarter to $26 billion. Same-store sales grew 2.6% in Q2 and its operating income margin was 1.2%.

Target raised its full-year revenue guidance in the low to mid-single digits. It expects an operating margin rate of 6% in the second half of 2022.

“I am very pleased with the underlying performance of our business, which continues to grow traffic and sales while delivering broad-based unit-share gains in a very challenging environment,” CEO Brian Cornell said in a news release.

By early June, the goal was there It downgraded its second-quarter guidance. The Minneapolis-based company cut its Q2 operating margin forecast to 2% from 5.3%.

The company also announced plans to raise prices to address “unusually high transportation and fuel costs.” In addition, Target also announced its intention to eliminate excess inventory and cancel orders by the end of the second quarter.

“While these inventory actions will put significant pressure on our near-term profitability, we believe this is the right long-term decision to support our guests, our team and our business,” Cornell said Wednesday.

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Target then made the decisions Missed earnings estimates, lowered guidance on profits and posted large inventories of unsold goods in the first quarter. Those results sent Target shares to their lowest level since September 2020.

Target shares fell more than 3% earlier Wednesday Market trading. Shares rose 3.9% to 180.15 on Tuesday. TGT stock has scaled back above 10-week support, but is still some distance from the bearish 50-day line.

Walmart earnings

Assessments: Analysts forecast Walmart’s earnings to fall 9% to $1.62 per share. Analysts were targeting revenue of $150.9 billion, up 7%.

Results: Walmart earned $1.77 per share versus $1.78 a year ago. Revenue rose 8.4% to $152.9 billion. Much of that sales gain reflects higher prices, which are in response to rising costs.

Walmart reported weak fiscal Q1 results and guidance on May 17, then followed up with another warning on July 26.

As inflation-hit shoppers shifted to cheaper staples and discretionary spending, the retail giant found itself needing big-ticket items like TVs.

On Tuesday, Walmart signaled that it was getting a handle on its inventory.

“The actions we took to improve inventory levels in the U.S., along with a higher mix of sales at grocery stores, put pressure on profit margins for Q2 and our outlook for the year,” CEO Doug McMillon said in a statement.

Walmart canceled billions of dollars in orders to help align inventory levels with expected demand, executives told analysts on Tuesday. Fewer items and higher prices have resulted in strong revenue, with Walmart reporting that “middle- to high-income customers” are flocking to its stores.

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Outlook: Dow Jones retail giant Walmart US expects same-store sales to rise 3% excluding fuel in the second half of the year, or 4% for the full year. Based on current exchange rates, the company predicts that it will be looking at about $2.1 billion in the second half of 2022.

Walmart’s full-year adjusted EPS declines 9%-11%. In July, the discount giant cut estimates, forecasting an EPS decline of 11%-13%. Analysts had forecast full-year earnings of $5.69 per share, down 11.9%.

For Q3, Walmart expects net sales growth of about 5% and a 9%-11% decline in adjusted EPS.


Is Walmart buying or selling now?


Walmart shares rose 5.1% to 139.39 on Tuesday. According to MarketSmith analysis, the stock is above its 50-day line and working towards its 200-day moving average.

There are 48 in stock Collaborative assessment In 99. It has a relative strength rating of 33, which is an exclusive IBD Stock Checkout A measure of stock price movement with a score of 1 to 99. The rating shows how a stock has performed over the past 52 weeks against all other stocks in IBD’s database. The EPS estimate of the stock is 69.

Higher retail revenue

Walmart and Target earnings were part of a big week for retail stocks. Others to be reported during the week are the cost-free experts TJX (TJX) and Rose Stores (Roast)

Walmart’s Dow Jones Bear Home Depot (HD) First Q2 views Tuesday opening, along with a rival home improvement chain Lovin (less) on Wednesday’s tube.

The inflation rate eased to 8.5% in July from 9.1% in June. The decline was largely attributed to lower gas prices, but federal data showed that food and other commodity prices were still rising.

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Best buy (BBY), Dollar Tree (DLTR) and Dollar General (DG) were among other retail stocks that fell on a late July warning from Walmart.

Target is in third place behind Walmart and Costco (cost), in Retail—major discount chains Industry group. The composite rating of the stock is 48. Its relative strength rating is 13 and its EPS rating is 82.

Follow Kit Norton on Twitter @kidnorton For added security.

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