Comparable sales increased 2.7% on top of 12.7% growth last year.
The gross margin for the quarter contracted by 330 basis points to 24.7%. The gross margin rate reflected higher markdown rates, inventory shrink, and merchandise and freight costs, net of retail price increases, compared with last year.
The operating margin was 3.9%, and operating income for the quarter declined 49.2% to $1 billion.
The company held $954 million in cash and equivalents as of October 29, 2022. Cash provided by operating activities for nine months totaled $552 million.
Inventory at the October end was $17.1 billion, up 14.4% Y/Y.
EPS of $1.54 missed the analyst consensus of $2.13.
The company paid dividends of $497 million in the third quarter, compared with $440 million last year.
As of Q3 end, TGT had approximately $9.7 billion remaining capacity under the prior August 2021 repurchase program.
Brian Cornell, chairman and CEO of Target, said, “In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty.”
Outlook: Target sees a low-single-digit decline in comparable sales for Q4. The company expects Q4 operating margin rate of around 3%.
Price Action: TGT shares are trading lower by 12.90% at $155.90 in premarket on the last check Wednesday.
