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Target Misses Lowest Profit Estimate, Still Predicts Rebound

  • Markdowns, other moves to slow inventory surge take toll
  • Retailer maintains operating-margin goal for rest of year
A Target store in Pleasant Hill, California.
A Target store in Pleasant Hill, California.Photographer: David Paul Morris/Bloomberg
Updated on

Target Corp. is betting heavily on a dramatic financial comeback the rest of this year after badly trailing its own forecast as well as Wall Street’s estimates in the second quarter.

The retailer stuck with its outlook for operating income of about 6% of sales during its fiscal second half after taking a painful hit from aggressive moves to reduce inventory. During the three months ending in late July, the operating margin slumped to 1.2%, lower than the 2% forecast Target issued in June when it slashed its profit outlook.