The post Target’s price cuts pay off with big beat, stock soars 16% appeared on BitcoinEthereumNews.com.

Key points Target stock soared 16% on Wednesday amid impressive Q2 financial results. The firm also raised its guidance for the remainder of FY24. We examine how investors should interpret these developments. Target (NYSE: TGT) stock jolted 16% higher on Wednesday morning on the heels of second-quarter 2024 earnings beat and guidance raise. The big-box retail chain reported adjusted earnings of $2.57 per share, up 40% year over year from $1.80 in the year-earlier quarter, beating Wall Street’s consensus estimate by $0.39. Furthermore, Target’s Q2-2024 revenue grew 2.7% year over year to $25.5 billion, slightly beating the analysts’ consensus estimate of $25.02 billion, while the company’s operating income increased 36.6% to $1.6 billion. Additionally, Target’s margins improved, with the company’s operating income margin rate coming in at 6.4% versus 4.8% in the year-earlier quarter and Target’s gross margin rate increasing to 27% to 28.9%. Analysis: Cost-cutting strategy pays off With such impressive quarterly data, Target CEO Brian Cornell could assuage investors’ concerns about the company’s price-cutting strategy. “We feel great about the reaction that we’re seeing from the consumer based on the 5,000 items where we’ve seen price reductions,” Cornell assured reporters in a call. Moreover, the CEO declared that Target’s price-cutting strategy “certainly contributed to traffic growth during the quarter” — we expect that to continue over the balance of the year”, and that the firm expects the trend to continue throughout the year. Notably, Target’s traffic (measured by number of transactions) grew 3% in Q2 of 2024. That’s a huge improvement over the 4.8% decline in traffic in the year-earlier quarter. Another sign that Cornell’s turnaround efforts are working is Target’s 2% year-on-year comparable sales increase. This is “at the high end of the Company’s expectations,” Target reported, and bucks an unfavorable trend after four consecutive quarters of comparable-sales declines. According to Yahoo Finance, Cornell declined to say if more price cuts…

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Filed under: News - @ August 22, 2024 6:23 am