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Will Target’s (TGT) Efforts Help Overcome Impediments in ’18? | Nasdaq.com

Impediments

Shares of Target did come under pressure following third-quarter fiscal 2017 results.  Despite a positive earnings surprise, investors remained concerned about the year-over-year decline registered in the bottom line and management’s commentary about highly competitive environment in the fourth quarter.

The competition has intensified following Whole Foods Market’s buyout by Amazon AMZN . Further, the fourth quarter coincides with the holiday season, which is often a make-or-break time for retailers, as it accounts for a sizeable chunk of yearly revenues and profits. Target also did not provide an encouraging earnings outlook for the final quarter due to increased spending related to stores, lower pricing and higher wages that are likely to weigh upon margins.

The company has been jostling with waning margins for quite some time now. In both the first and second quarters of fiscal 2017, gross margin contracted 40 basis points to 30.5%. In the third quarter, gross margin contracted 10 basis points to 29.7% on account of pricing and promotions, as well as cost of digital fulfillment. Maintaining the same chronological order, operating margin shriveled 80 basis points, 90 basis points and 120 basis points to 7.4%, 6.8% and 5.2%, respectively.

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Will Target’s (TGT) Efforts Help Overcome Impediments in ’18? – Nasdaq.com.