Target Corp on Tuesday said there could be periodic shipping delays in merchandise from China while the discounter scrambles to stock up on more household essentials in its US stores, as it confronts the repercussions of a spreading new virus.
Like many retailers, Target is wrestling with the growing uncertainty of the COVID-19 virus as it upends supply networks.
In the past few days, US customers have been crowding online services and grocery and discount stores to stock up on all types of basics from cleaning products to canned food.
Photo: AFP
Amazon.com Inc’s app for Prime Now same-day grocery orders is warning that delivery availability might be limited.
Target CEO Brian Cornell believed shoppers would continue to stock up on essentials for the next few weeks.
Still, Minneapolis-based Target offered a solid profit outlook and said that it has not seen anything related to the spreading new virus that would affect its financial targets.
The forecast came as the discounter reported strong fourth-quarter profits, though its sales were weighed down by weak demand for toy and electronics during the crucial holiday shopping season.
Target joins a string of other retailers with disappointing sales during the shortest holiday shopping season since 2013.
Walmart Inc had a rare sales shortfall, while Macy’s Inc and J.C. Penney Co saw sales decline during the period.
Kohl’s Corp also posted disappointing holiday sales, but on Tuesday reported that fourth-quarter earnings and revenue beat Wall Street expectations.
During the conference call with analysts, Target executives said it is working with each of the factories in China and examining the state of the ports.
“We are monitoring the situation hour by hour as conditions evolve,” Cornell said on the call.
Cornell said that Target has seen “aggressive shopping across our stores,” and it is increasingly working with domestic suppliers to bring in more products like household essentials and canned goods.
Target delivered net earnings of US$834 million, or US$1.65 per share, for the three-month period ended Feb. 1. That compares with US$799 million, or US$1.52 per share, a year earlier. Revenue rose 1.8 percent to US$23.13 billion.
Analysts were expecting US$1.65 per share on revenue of US$23.44 billion, according to FactSet.
Comparable sales — or sales in stores open at least a year — rose 1.5 percent. That included online sales growth of 20 percent in the period.
It marked the company’s 11th consecutive quarter of growth in comparable sales, a key metric of a retailer’s health.
Same-day services, including picking up orders at the store or curbside, accounted for more than 80 percent.
Target said that for the year it expects a low single-digit increase in comparable sales and adjusted earnings per share in the range of US$6.70 to US$7. Analysts expect US$6.88 per share.
Shares of Target fell 3.2 percent to close at US$105.84 in New York trading on Tuesday.
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