Target Reports Stellar Third Quarter with 12.7% Sales Increase; gross margin rate affected by supply chain crisis

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THE WHAT? Target announced a 12.7% sales increase in the third quarter, with profits up 47%.

THE DETAILS The U.S. retailer recorded same-store sales growth of 9.7%, with comparable digital sales growth of 29%.

Total revenue of US $ 25.8 billion increased 13.3% year-on-year, while operating income was US $ 2 billion, up 3.9% from 2020.

However, the company did not come out completely unscathed, with a third quarter operating margin rate of 7.8% versus 8.5% in 2020, with a third quarter gross margin rate of 28.0%. , compared to 30.6% in 2020.

According to a press release, “This year’s gross margin reflects pressure from rising freight and freight costs, increasing inventory reduction and increasing supply chain costs. resulting from the increase in compensation and headcount in the company’s distribution centers ”.

Target beat expectations with results and increased its projections for same-store sales in the fourth quarter.

THE WHY ? Speaking about third quarter growth, Brian Cornell, President and CEO of Target, said, “After growing nearly 21% a year ago, our 12.7% increase in the third quarter was entirely driven by traffic and reflects the continued strength of our in-store sales, same-day digital fulfillment services and double-digit growth in our top five merchandising categories. With a strong inventory position as the peak of the holiday season approaches, our team and company are ready to serve our customers and ready to ensure continued and strong growth, throughout the holiday season and through the year. -of the. “


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