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Inflation Pain Trips Up Target; Stock Tumbles

Target (TGT) - ★★★★ - Ranked # 15 in our Q2 2024 Large Cap Rankings

Target Corp. (TGT) saw its stock price tumble 8% in trading today after reporting underwhelming first-quarter performance. The retailer missed Wall Street's earnings expectations as higher costs for food and household essentials weighed on profitability.

Target's CEO Brian Cornell pointed the finger at elevated inflation for straining consumer wallets and hurting the company's quarterly results. "Higher prices, particularly on essential items, put significant pressure on our customers' budgets," Cornell explained on an earnings call.

The Q1 numbers highlight Target's challenges this quarter. While net sales decreased a modest 3.1% year-over-year to $24.5 billion, earnings per share plunged a steeper 1% to $2.03, missing analysts' estimate of $2.05. On a positive note, Target's gross profit margin of 27.7% exceeded the 27.4% expectation.

However, these bright spots were overshadowed by the earnings miss and Cornell's comments about inflation's toll on Target's customer base. Investors reacted by sending the retailer's stock down sharply in today's trading.

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