Target Q1 Results Leads With $500 Million in Shrink Impacting Profitability & CEO Pointing to ORC As the "Driver of the Issue"

Expresses Concern Over Financial Impact
& Keeping Stores Open

Target Corporation Reports First Quarter Earnings

MINNEAPOLIS, May 17, 2023 /PRNewswire/

Target sales grew 0.5 percent, reflecting flat comparable sales combined with the benefit of sales from new locations.

Brian Cornell, chair and CEO of Target Corporation, said, "We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we've established with our guests. It's required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now. Thanks to the team's dedication, we saw an increase in guest traffic in Q1, with total sales increasing and profitability ahead of expectations.

As we look ahead, we now expect shrink will reduce this year's profitability by more than $500 million compared with last year. While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue. We are making significant investments in strategies to prevent this from happening in our stores and protect our guests and our team. We're also focused on managing the financial impact on our business so we can continue to keep our stores open, knowing they create local jobs and offer convenient access to essentials.

For the full year, we are maintaining our full-year financial guidance, based on the expected benefit from efficiency and cost-savings efforts and our team's continued focus on agility, flexibility and retail fundamentals in the face of continued challenges including inventory shrink. At the same time, we will continue making long-term investments in our stores, supply chain and our team, positioning Target for profitable growth and market-share gains in the years ahead."

Comparable sales were flat to last year in the first quarter, reflecting comparable store sales growth of 0.7 percent and comparable digital sales down (3.4) percent. Total revenue of $25.3 billion grew 0.6 percent compared with last year, reflecting total sales growth of 0.5 percent and a 10.2 percent increase in other revenue. Operating income of $1.3 billion in first quarter 2023, was down 1.4 percent from last year, driven by an increase in the Company's SG&A expense rate.

First quarter operating income margin rate was 5.2 percent in 2023, compared with 5.3 percent in 2022. First quarter gross margin rate was 26.3 percent, compared with 25.7 percent in 2022. This year's gross margin rate reflected the benefit of lower freight costs, retail price increases, lower clearance markdown rates, and lower digital fulfillment costs driven by lower digital volume and a favorable mix of lower-cost same-day services. These benefits were partially offset by higher inventory shrink.

Editor's Note: The one statement; "We're also focused on managing the financial impact on our business so we can continue to keep our stores open," leads one to think that they're considering or may be forced to close some stores. Especially with the last part of that statement; knowing they create local jobs and offer convenient access to essentials," as that may indicate they're genuinely concerned about the community's where they may have to close stores.

We've never seen these types in comments in any quarterly report in our thirty year history. So, for those questioning the ferocity of the current crime surge we offer Brian Cornell's sincere comments that he's publicly making to the financial community, the SEC, and Target's shareholders. Which are made, as required by Federal law, and regulated by Section 302 of the Sarbanes-Oxley Act of 2002. Where by:

A company's CEO and CFO must certify in every annual or quarterly report that:

• They have reviewed the report;

• Based on their knowledge,

  • the report does not contain any material misstatements or omissions;

  • the financial statements, and other financial information included in the report, fairly present in all material respects the company's financial condition, results of operations and cash flows;

Which given the reputation and stature of both Target, Brian Cornell - CEO, their legal counsel, and their Assets Protection department leaves no question about their validity or accuracy. - Gus Downing