Target earnings miss the bull’s-eye, hint at cautious consumers

Unlike a YouTuber’s Target haul, the Minneapolis-based retailer’s latest earnings report is something of a mixed bag.

The upside: Target posted higher holiday-quarter earnings than analysts expected, thanks partly to strong Black Friday and Cyber Monday spending, while net income rose almost 58% YoY to $1.4 billion.

The downside: The company’s annual revenue fell for the first time since 2016, and Target doesn’t expect sales to jump back up soon.

In Q4 2023, comparable sales dipped 4.4%. In the current quarter, the company expects comparable sales, or sales from stores or digital channels functioning for at least 12 months, to dip between 3% and 5%. Target anticipates full-year comparable sales for 2024 to be flat up to 2%.

Target’s up and down sales reflect a broader slowdown in discretionary spending. But it’s not the end of the world: While comparable sales and traffic trends were down from 2022, the retailer still marked improvement in those areas for the second consecutive quarter.

Before an investor day on Tuesday, CEO Brian Cornell stressed the company’s anticipated growth, explaining that he aims to get “Target back to being a growth company, from a comparable sales standpoint, from a traffic standpoint, and from a [market] share standpoint,” per Yahoo Finance.

In an earnings call, Cornell said the company will launch a membership feature next month, Target Circle 360, offering unlimited same-day delivery for members.

It’s a logical move. Existing perks, like same-day pickup services, have been a customer favorite: Target’s various same-day offerings, including in-store pickup and Drive Up, represented more than 10% of total sales in Q4, marking a 13.6% increase from the previous quarter.