Why Target Stock Gained 16% in July
Shares of Target (NYSE: TGT) stock gained 16% in July according to data provided by S&P Global Market Intelligence. The retailer's stock was helped along by a 9% rise in the S&P 500 and a valuation that looked too cheap to ignore.
Target was flying high throughout the pandemic, posting some of its best performance ever. Its mix of discounted prices, well-designed stores, and industry-leading omnichannel services were very attractive when customers were focused on essentials. But as inflation began to make itself comfortable in the economy and shoppers began to hold back spending, management wasn't prepared for the oncoming train. Comps increased 3% over last year in the 2022 first quarter, but earnings per share declined from $4.20 last year to $2.17 this year. Operating margin fell from almost 10% last year to 5.3%.
Management promptly addressed the pressing issues, which mostly amount to rising costs and excess inventory. As people stopped spending on costly items, retailers have been stuck with an abundance of them. It laid out a plan for increasing prices on some items to account for increased costs while slashing prices on some of the overstock to get rid of it.
Source Fool.com
