Why Target Corporation Fell 13.5% in May

A Target local to the author, just before shutting down in January. This aisle used to hold cold beer and various snacks. Image source: Anders Bylund.

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What: Shares of Target fell 13.5% in May 2016, according to data from S&P Global Market Intelligence

So what: First, the stock took a 5.5% dive on May 11 due to a bevy of disappointing earnings reports from Target's sector rivals. Notably, Macy'sshares plunged 13%

A week later, those pessimists were proven right. Target's own first-quarter report


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Now what: Target actually beat earnings estimates in the first quarter, and CEO Brian Cornell was "pleased" with that report. But it wasn't all rainbows and butterflies, as Cornell also pointed to a "challenging" consumer environment in the short term.

The company's promotional events have proven successful in recent quarters, and you can expect more of these revenue-grabbing swings as Cornell fights to right the ship. Target is also taking controversial stances on important issues like minimum wagetransgender rightsrarely affects a major company's bottom-line results

It's back to Brass Tacks 101 for the nationwide retailer. Annual sales have only increased by 6% over the last 5 years, alongside falling operating margins and wildly bouncing free cash flows. Target's management needs to put a finger on the retail strategies that work and double down on these opportunities. Hot tip: Cornell is thinking hard about his minuscule online sales and the click-to-lay-away digital order approach. He could (and probably should) put his back into these options.

The article Why Target Corporation Fell 13.5% in May

Anders Bylundfree for 30 daysconsidering a diverse range of insightsdisclosure policy