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Target (TGT) beat Wall Street's earnings expectations for the first time in a year with a 1% increase in holiday-quarter sales compared to the same period in the previous year. However, the big-box retailer's profit and margins decreased and the full-year outlook is conservative. Target said it expects full-year earnings per share of between $7.75 and $8.75. That was below Wall Street’s expectations of $9.23 per share.
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Target's sales of discretionary items decreased despite a previous spike during the first two years of the COVID pandemic. The company's total revenue grew by nearly 40% from fiscal 2019 to 2022. Target expects a low single-digit decline to a low single-digit increase in comparable sales for fiscal 2023. CEO Brian Cornell acknowledged the difficult environment but praised the company's performance.
Why it matters
Target has faced sales trends and market sentiment shifts, with concerns about inventory troubles, squeezed profit margins, and inflation-pinched consumers. The discounter's profit margins have been weak due to markdowns and higher supply chain costs. Last summer, Target announced an inventory plan to clear out unwanted goods.
