Target Shares Fall on Q1 Profit Warning

Big box retailer Target saw its shares crumble on Thursday after the company said that its first quarter profits will be hurt by higher costs.

Shares fell almost 7% in pre-market trading on the news but recouped some losses.

CEO Brian Cornell said that the retailer has benefited from a surge in online orders but warned that it would have lower profits this quarter due to higher costs. The company also saw an increase of 7% in same-store sales. This compares to an increase of 1.5% in the fiscal fourth quarter.

Target is spending more on labor, selling fewer high-margin items and writing down apparel and other items that are not selling. The company said it’s already spent more than $300 million on coronavirus-related employee expenses.

In an interview with CNBC’s “Squawk Box,” Cornell said Target’s investments in online shopping options and its workforce will lead to “market share gains that I think will benefit the brand for years to come.”
Cornell did not provide any specific estimates for its quarterly earnings.

The company also said that it plans to extend its $2 an hour temporary pay increase for store employees, additional child care benefits and paid leave policy for older or at-risk members of its workforce until May 30th.

“I certainly think that going forward, for the foreseeable future, consumers are going to take advantage of that one-stop shop,” said Cornell.

Disclaimer: We have no position in Target Corporation (NYSE: TGT) and have not been compensated for this article.