Today: April 23, 2024
Today: April 23, 2024

Target's earnings surge despite holiday sales dip, sees sales recovery in 2024

Share This
LA Post: Target's earnings surge despite holiday sales dip, sees sales recovery in 2024
Reuters
Siddharth Cavale and Savyata Mishra
March 05, 2024

By Siddharth Cavale and Savyata Mishra

(Reuters) - Target on Tuesday reported higher holiday-quarter earnings on a smaller-than-expected sales decline and predicted that annual comparable sales would come in largely above Wall Street expectations.

The mass merchandiser is banking on same-day services, product launches and a new membership program to boost spending at its stores.

Target reported adjusted earnings of $2.98 per share in the fourth quarter, compared to $1.89 per share in the same period a year earlier. Analysts on average were expecting $2.42 per share, according to LSEG estimates. It wasn't immediately clear if the figures were comparable.

Total comparable sales in the November to January period fell 4.4% compared with the 4.6% decline analysts were expecting, in part due to a recovery in sales on Target.com. Online sales fell 0.7% during the fourth quarter, an improvement from the 6% decline in the previous quarter.

Robust Black Friday and Cyber Monday spending helped drive holiday-quarter sales, the company said, and shoppers gravitated to newly launched collections such as Kendra Scott jewelry and private-label Figmint line of kitchenware.

Shoppers also responded to same-day pickup services, such as Drive-up, which made up more than 10% of total sales in the quarter, the company said.

The quarter marks the end of a challenging year for Target. During the second quarter, Target reported its first decline in store visits and comparable sales since before the pandemic as inflation limited Americans' spending on discretionary items, which accounts for 50% of Target's revenue.

Commerce Department data showed that prices on a basket of goods and services continued to tick up in January.

The chain also faced unique challenges including a backlash in May over its LGBTQ-themed merchandise and a surge in retail crime that it said led to the closure of nine stores in New York, San Francisco, Seattle, and Portland, Oregon.

Bigger rival Walmart said last month that inflation is driving shoppers to hunt for value on everyday goods, though there are signs that discretionary spending is picking up.

Looking ahead, Target will focus on rolling out new products and services, including a new Target Circle membership program, to reignite sales, traffic and market share gains in 2024, Target's CEO Brian Cornell said in a statement.

Media reports last month said Target was weighing a new paid membership program similar to Amazon's Prime and Walmart's Walmart Plus program.

Target introduced its earnings outlook for 2024, saying it expects adjusted earnings between $8.60 to $9.60 per share. The midpoint of that range was largely in line with analysts' expectations of $9.14 per share, according to LSEG data.

Comparable sales are expected to be in a range of flat to up 2% this year, compared to analysts' average expectations of 0.86% rise.

Gross margins in the fourth quarter ended Feb. 3 rose to 25.6%, from 22.7% a year earlier, aided by lower freight and supply-chain costs, healthy inventory and lower markdowns.

(Reporting by Savyata Mishra in Bengaluru and Siddharth Cavale, Editing by Nick Zieminski)

Popular

Jamal Murray sinks shot at buzzer to cap 20-point comeback and lead Nuggets past Lakers 101-99

Jamal Murray sank a 15-foot step-back jumper at the buzzer and the Denver Nuggets wiped out a 20-point second-half deficit to stun the Los Angeles Lakers 101-99 Monday night and take a 2-0 lead in their Western Conference playoff series

Nelly Korda puts bid for 6th straight victory on hold after withdrawing from Los Angeles tourney

Nelly Korda is putting her bid for a historic sixth straight victory on hold

Without cameras to go live, the Trump trial is proving the potency of live blogs as news tools

With cameras not allowed at former President Donald Trump's hush money trial in New York, live news blogs are coming into their own as an important news tool

Yankees manager Aaron Boone is ejected 5 pitches into game vs. Athletics

New York Yankees manager Aaron Boone was ejected by Hunter Wendelstedt five pitches into a game against the Oakland Athletics over a remark from a fan behind the dugout aimed at the plate umpire

Related

Apple says it will hold event on May 7

US new home sales rebound in March

US homebuilder NVR tops profit estimates as tight housing supply spurs sales

Walmart-backed fintech One launches 'buy now, pay later' loans, CNBC reports

- Advertisement -
Advertisement: Limited Time Offer