The retail giant is enjoying a margin recovery, according to analysts.
Target Corp., which struggled with inventory issues in 2022, is now reaping the benefits of improving gross margins, say analysts.
“After a difficult 2022, when Target was one of the more highly visible examples of the inventory glut that plagued retailers last year, the benefits of being cleaner were notable in the 1Q23 report,” wrote D.A. Davidson analyst Michael Baker, in a note released Wednesday. “This includes improving gross margins, off of a low base, better free cash flow trends, and the open-to-buy to lean into some potential areas of upside in the back half.” D.A.
Related: Target stock swings to a gain as an earnings beat helped offset a downbeat near-term outlook The retail giant’s stock ended Wednesday’s session up 2.6%, outpacing the S&P 500 index’s SPX gain of 1.2%. Target shares are up 0.2% in premarket trades Thursday.Discretionary spending was another key theme of Target’s first-quarter results, with the retailer noting continued softness in its discretionary categories. However, the retailer is seeing strength in its “frequency” businesses of beauty, food & beverage and household essentials.
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