- Target exceeded Wall Street’s earnings expectations despite sluggish sales and increased purchases of necessities by shoppers In the first quarter, Target reported earnings per share of $2.05, exceeding the expected $1.76, and revenue of $25.32 billion (up1%), slightly above the anticipated $25.29 billion. Net income for the fiscal first quarter dropped to $950 million, or $2.05 per share, compared to $1.01 billion, or $2.16 per share, in the previous year.
- Total revenue rose nearly 1%, slightly surpassing analysts’ expectations. Comparable sales remained flat in the first quarter, meeting Wall Street’s forecast of 0.2% growth.
- The beauty category experienced strong sales growth, while apparel and home categories saw declines. Comparable digital sales declined by 3.4%, partly due to decreased package shipments to homes, while in-store shopper traffic grew by approximately 1%.
- Target’s inventory and gross margin rate improved in the first quarter (to 26.3% from 25.7%), but its operating margin rate has yet to reach pre-pandemic levels. Target CEO Brian Cornell highlighted that while customers are buying fewer discretionary items, the company is attracting them with groceries, everyday essentials, and trendy products.
- Target expects sales to remain slow in the current quarter with a projected low-single-digit decrease in comparable sales. The retailer maintained its full-year outlook, anticipating comparable sales to range from a low-single-digit decline to a low-single-digit increase, with earnings per share between $7.75 and $8.75. I do not own shares of Target, and instead own shares in Amazon.com in managed portfolios.
By Lee Kern