Q1 profits drop 52 percent amid rising costs

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Q1 profits drop 52 percent amid rising costs

MINNEAPOLIS, Minnesota - Amid rising costs of essentials, such as fuel and food, and the rapid return of consumers to normalized spending, Target reported its profits fell 52 percent, compared to the same period last year.

During the COVID 19 epidemic, Target has been left with a sizable inventory that must be marked down to sell, because of the slowed purchases of major items, such as large TVs and appliances.

After posting quarterly results, Target's financial report for the first quarter of the year came one day after Walmart's shares fell 17 percent for similar reasons.

The shares of Target Corp. closed down 25 percent this week, the highest one-day sell-off since the Black Monday market crash of 1987.

Consumer spending continues to be strong despite inflation hovering near four-decade highs. In its most recent quarter, Target's revenues rose 4 percent to $24.83 billon, better than expected, even as costs are rising for major retailers.

Things have changed significantly from 13 weeks ago. Target CEO Brian Cornell said we did not project, I did not project, the kind of increases we would see in freight and transportation costs.

Target reported that first quarter net income fell to $1.01 billion, or $2.16 per share, in the quarter ended April 30th, while its per-share earnings adjusted for one-time costs were $2.19, far from Wall Street projections of $3.07 per share.

The behavioral change among American consumers has negatively impacted companies that saw a lot of profits over the past two years.

Laura Veldkamp, a finance professor at Columbia University, said that the constant yo-yo of demand has made it harder for businesses to plan ahead, because it has made it harder for them to plan ahead.

As demand rises, shifting mixes of goods remain in short supply, which pushes up their prices.

In the last quarter, sales at Target stores were up by 3.4 percent, and the company posted an 18 percent increase in the same quarter, while online sales increased 3.2 percent, following a growth of 50.2 percent.