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Coffee With Greta: Stocks Slide After Target’s Profit Warning

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Editor's Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here.

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DJIA Futures: -252 (-0.8%)

SPX Futures: -37 (-0.9%)

NASDAQ Futures: -156 (-1.2%)

Good morning friends!

Futures are falling after a profit warning from Target.

Let’s get right to it!

Target Slides On Profit Warning

Target (TGT) shares are sliding 7.2% ahead of the open after slashing its fiscal Q2 profit margin expectations. 

The retailer said it will be lower prices and cancel orders in an effort to reduce excess inventory.

Target said it had over $15 billion of inventory at the end of fiscal Q1, up 43% year-over-year.

CEO Brian Cornell told CNBC, “We thought it was prudent for us to be decisive, act quickly, get out in front of this, address and optimize our inventory in the second quarter — take those actions necessary to remove the excess inventory and set ourselves up to continue to be guest relevant with our assortment.”

Target now expects its operating margin rate this quarter to be around 2%.

The retailer previously forecast its margin rate would be relatively unchanged from Q1 at 5.3%. 

The company said it expects profit margins to rise to around 6% in the second half of the year.

Kohl’s Surges On Takeover Talks

Kohl’s (KSS) shares are surging 11.9% in premarket trade after the company announced it has entered exclusive takeover talks with Franchise Group (FRG).

Franchise Group has offered to buy the department store chain at $60 per share, valuing the company at $8 billion. 

The companies said late Monday they have entered a three-week exclusivity period to discuss that bid.

The deal is subject to approval by both company boards. 

Trade Deficit Tumbles From Record

The U.S. trade deficit fell sharply in April.

The Commerce Department reported that gap shrank 19% to $87.1 billion. 

That was better than economists’ expectations for $89.4 billion.

The drop came as exports rebounded and imports fell. 

Exports rose 3.5% to $252.6 billion while imports fell 3.4% to $339.7 billion.

Oil Prices Stabilize

Oil prices are flat today as the market weighs supply concerns against increased demand expectations from China. 

West Texas Intermediate crude futures are down 0.3% at $118 bbl while Brent crude futures are slipping 0.4% to $119 bbl.

Analysts expect the drop in prices to be short-lived as Beijing and Shanghai, China return to normal after two months of Covid lockdowns. 

The market is also doubtful that OPEC’s agreement to increase production faster will actually alleviate tight supply.

U.S. Gas Prices Surge To Fresh Record

The national average for a gallon of regular gas jumped sharply again overnight.

AAA shows that price rose to $4.919/gal today. 

That’s up more than 5 cents from just yesterday and nearly 30 cents from a week ago. 

The national average is on track to hit $5/gal for the first time ever soon. 

13 states already have an average price over $5: Alaska, Arizona, California, Hawaii, Indiana, Illinois, Maine, Massachusetts, Michigan, Nevada, New Jersey, Oregon, and Washington. 

Peloton’s CFO Steps Down

Peloton (PTON) shares are flat in premarket trade after a new SEC filing revealed the company’s CFO is leaving. 

Jill Woodworth will be replaced by current Amazon Web Services executive Liz Coddington, effect next week. 

CEO Barry McCarthy said, “Having worked at some of the strongest and most recognizable technology brands, [Liz] not only brings the expertise needed to run our finance organization, but she has a critical understanding of what it takes to drive growth and operational excellence.”

Apple Unveils New Products 

Apple (AAPL) shares are down 1.4% ahead of the open after the tech giant hosted its annual Worldwide Developers Conference on Monday. 

Here’s everything Apple unveiled at the event:

  • New iPhone software, iOS 16
  • New iPad software, iPadOS 16
  • New Mac software, macOS Ventura
  • New Apple Watch software, watchOS 9
  • A new Apple M2 computer chip
  • A new MacBook Air with the M2 chip
  • A new 13-inch MacBook Pro with the M2 chip

Check out this article from CNBC for details on all the new software and devices that were announced.

In Case You Missed It

  • Amazon (AMZN) rallied 2% on Monday after implementing a 20-for-1 stock split. The online retail giant closed at $124.79 per share after closing at a split-adjusted price of $122.35 on Friday. Amazon is hoping the split will make the stock more accessible to smaller traders and investors. AMZN shares are down 2.3% ahead of the open.
  • Twitter (TWTR) shares dropped 1.5% on Monday as Elon Musk signaled his takeover deal is still in danger. In a letter, Musk accused Twitter of “resisting and thwarting” his right to information about fake users, calling it a “clear material breach” of the terms of the merger agreement. The letter said, “Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement”. TWTR shares are falling 1% in premarket trade.

 

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