What Happened?
Shares of general merchandise retailer Target (NYSE:TGT) jumped 3.7% in the afternoon session after the company announced its "Back-to-School-idays" savings event, aiming to attract shoppers with significant discounts ahead of the new school year.
The event, scheduled to run from July 27 to August 2, will feature deals of up to 30% on essential school items such as backpacks, children's apparel, and shoes. In a press release, Target detailed that it will offer savings on hundreds of items, with over 1,000 products priced under $5. To enhance the shopping experience, the company is also bringing back its popular in-store personalization stations, doubling the number of participating locations to nearly 500. These stations allow customers to customize items like backpacks and lunchboxes.
The promotion comes as the company seeks to drive sales and customer traffic. The move was announced on the same day news broke that Target would be ending its price match policy with competitors like Amazon and Walmart starting July 28, a decision tied to rising costs.
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What Is The Market Telling Us
Target’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 22.4% on the news that the company reported weak third-quarter results. Despite a modest increase in comparable sales driven by strong guest traffic and digital sales, same-store sales declined by 1.9%, reflecting a drop in in-store purchases. Profitability also came under pressure, as gross margin fell slightly due to higher supply chain and fulfillment costs. This, combined with elevated operating expenses, contributed to a significant EPS miss.
Additionally, Target's full-year EPS guidance was reduced and missed significantly, further disappointing investors. Management called out "unique challenges and cost pressures that impacted our bottom-line performance." Overall, this was a surprisingly bad quarter.
Target is down 22.8% since the beginning of the year, and at $105.97 per share, it is trading 34.1% below its 52-week high of $160.69 from October 2024. Investors who bought $1,000 worth of Target’s shares 5 years ago would now be looking at an investment worth $860.57.
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