Trump tariffs give struggling Target air cover to make one big change, at the expense of investors

Struggling Target (TGT) has found a great excuse to finally ditch its longstanding practice of providing quarterly earnings guidance.

The excuse: fresh Trump tariffs, mixed with a small dose of a typical retailer gripe of unpredictable weather.

Somewhat under the radar in its underwhelming Tuesday earnings release, Target told investors it would move away from quarterly profit guidance in favor of giving a full year outlook.

"This change reflects our expectation of continued elevated volatility, which limits the effectiveness of quarterly forecasts. As an example, consider the impact of warm weather on apparel sales in last year's third quarter, namely, our apparel comp [sales] moved from more than 3% growth in the second quarter to down nearly 1% in the third quarter, back up to a 3.5% growth in the fourth quarter," its new CFO Jim Lee said on the earnings call.

Lee added later on the call, "What we don't know is potential consumer demand that's across the board, across — based on how tariffs ripple across the economy, for instance."

Listen: Trump tariffs may trigger stagflationary shock

The discount retailer did signal a tariff driven profit warning for the first quarter, but put no hard numbers behind it. The Street was expecting slight first quarter profit growth, Target now sees "meaningful" pressure.

Target's full year profit guidance is so wide one could drive a Mac truck through it. Lee said the outlook incorporates a range of tariff-related scenarios.

The company also cut its long term outlook at its New York City investor day, much to the frustration of analysts. Target sees long-term EPS growth of a mid to high-single digit percentage, down from high-single digits previously. The Street had been modeling for around 10% growth.

It's worth noting that Target rival Walmart (WMT) — which has outperformed Target on sales and profit growth for more than a year as it attracts higher income shoppers — shared first quarter sales and earnings guidance a few weeks ago. Walmart is exposed to the same tariffs and US weather pressures as Target.

Digital retail behemoth Amazon (AMZN) served up its usual quarterly guidance for sales and operating income when it reported results in early February.

Yet, first quarter guidance is out there for Target's two key rivals so their investors can more precisely model out potential cash flow and stock valuation.

Further, sharing quarterly guidance has been a staple since Target CEO Brian Cornell took over in August 2014.

Based on Yahoo Finance's research, Target has issued quarterly profit guidance every single quarter under Cornell. The exception: when it pulled guidance of any kind in the first quarter of 2020 with the COVID-19 pandemic underway.