Target Corporation (TGT) is expected to report Q2 earnings Tuesday before the open with a conference call scheduled for 10:30 am ET.
Guidance
Analysts are looking for a profit of 76c on revenue of $15.46B. The consensus range is 74c to 79c for EPS, and revenue of $14.8B to $15.68B, according to First Call.
In May, Target said its FY08 EPS view of $3.47 is within a "reasonable range of outcomes"; analysts are expecting Target to report FY08 EPS $3.43. The retailer recently reported July same-store sales decreased 1.2% vs. consensus of down 0.3%. The company said total sales for the four weeks ended August 2 were $4.57B, up 4.7%, driven by sales in electronics, health and perishable items. For August, Target forecast SSS to decline 1% to 3%.
Between the faltering economy, soaring food and gas prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved and have cut back spending on discretionary items. Instead of spending on higher-profit goods like cashmere sweaters, consumers are flocking to wholesale clubs and discount apparel chains for basics like laundry detergent.
Analyst Views
In an effort to compete more effectively with rivals such as Wal-Mart (WMT), Target has set out to lure shoppers with its advertising, bright-colored stores and innovative products and designers. Telsey Advisory's Joseph Feldman said that while Target's prices "very often match Wal-Mart on identical items," that message is not reaching shoppers. He believes that Target must do more creative marketing and merchandising to convince customers "that the prices are the same at Wal-Mart".
Additionally, William Blair analyst Mark Miller noted that data on its credit card operations revealed that delinquency trends within Target's credit card portfolio "continued to weaken on a sequential basis and remain notably worse than last year".
Next event: Target is expected to release its August sales on September 4.
