Target (TGT.N) is improving what it can control to try to compensate for price-sensitive consumers. The U.S. retailer reported higher operating margins of 5.3% on Wednesday for the quarter ending Oct. 28, beating analysts’ expectations of 4%, according to LSEG. Net earnings jumped 36% year-over-year to nearly $1 billion. That’s despite a 4% decline in sales, as customers pulled back on buying apparel, electronics and home accessories. It’s the best the $60 billion retailer can do, and shareholders are rightly rewarding it.
Shares jumped 17% on Wednesday morning, adding $10 billion to the company’s value. The key to its success this quarter is inventory, which fell 14% from the same period last year. For a long time, too much stuff sat in Target’s back room. Last year the company led by Brian Cornell cut its profit outlook after warning about high inventory levels and forthcoming price cuts to clear it.
Shoppers are still having a hard time shaking off bad moods. Fresh data from U.S. Commerce Department showed that retail sales slipped 0.1% in October after months of gains. But at least Cornell is hitting the mark at the bottom while the top remains elusive.(By Jennifer Saba)
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