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Target (TGT) is giving itself black eyes on its earnings day.
The discount retailer badly missed Wall Street estimates for first quarter earnings on Tuesday morning and slashed its full-year outlook. Its results are likely to spark worry that consumer protests of its January retreat on diversity, equity, and inclusion (DEI) policies, combined with Trump tariffs, have created a financial tornado destined to wallop the company.
Shares fell around 7% early Wednesday.
Target CEO Brian Cornell and other top execs on a media call declined numerous times to specifically say if they are raising prices because of tariffs. They also declined to quantify the sales impact of DEI-related consumer boycotts.
"Pricing is a very dynamic part of our business," Cornell said, noting price changes are an ongoing effort. "We make adjustments literally each and every week."
Cornell said Target is "looking at ways to mitigate some of those price changes," such as sourcing more products from the US as opposed to China. "So there's certainly items that are being reduced. Some will go up."
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First quarter net sales: -2.8% year over year to $23.8 billion, vs. estimates for $24.35 billion
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Gross profit margin: 28.2% vs. 28.8% a year ago, vs. estimates for 27.44%
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Diluted earnings per share: -35.9% year over year to $1.30, vs. estimates for $1.65 (Guidance was for "meaningful" year-over-year pressure.)
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Comparable sales: -3.8% year over year, vs. 1.84% estimate (Last year, comparable sales fell 3.7%; Walmart US reported a 4.5% gain.)
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Digital comparable sales: +4.7%
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Target's lackluster earnings come hot on the heels of a mixed quarter from larger rival Walmart (WMT) last week.
Walmart's first quarter sales rose 2.5% from the prior year to $165.6 billion, falling shy of Wall Street estimates of $166.02 billion.
Its adjusted earnings per share increased 1.7% year over year to $0.61, beating estimates of $0.58. US same-store sales also beat expectations with a 4.5% increase, led by health and wellness, as well as groceries.
And while Walmart reiterated its full-year earnings per share outlook of $2.50 to $2.61, it was mostly below analyst estimates of $2.61. This is despite the retailer beating earnings estimates by $0.03 for the first quarter.
Walmart said it would begin raising prices in a few weeks due to tariffs from the Trump administration. "So we'll work hard to try to keep prices low. But it's unavoidable that you're going to see some prices go up on certain items," Walmart CFO John David Rainey said on Yahoo Finance's Catalysts (video above).
