Despite the drop in sales, Target’s operating income reached $1.2 billion, a 273 per cent increase over last year. This growth was propelled by a higher gross margin rate, the company said in a press release.

The operating income margin rate for Q2 FY23 was 4.8 per cent, a stark contrast to the 1.2 per cent recorded in Q2 FY22. Additionally, the gross margin rate rose to 27 per cent in Q2 FY23, up from 21.5 per cent in Q2 FY22.

The second quarter also saw an uptick in selling, general, and administrative expenses, with the rate at 20.9 per cent, compared to 19.2 per cent in the corresponding quarter of FY22.

Inventory levels at the end of Q2 were down by 17 per cent compared to last year. This decrease reflects a substantial 25 per cent reduction in discretionary categories, balanced by inventory investments to support frequency categories, as well as strategic investments targeting long-term market-share opportunities.Top of Form

"Our second quarter financial results clearly demonstrate the agility of our team and the resilience of our business model, as we saw better-than-expected profitability in the face of softer-than-expected sales. With the benefit of a much-leaner inventory position than a year ago, the team was able to quickly respond to rapidly changing topline trends throughout the second quarter, while continuing to focus on the guest experience," said Brian Cornell, chair and chief executive of Target Corporation.

Fibre2Fashion News Desk (DP)