Stacey Widlitz, founder of SW Retail Advisors, talks about Macy’s 150 store closures and shares her top retail picks on “The Claman Countdown.”
Target on Tuesday reported an increase in holiday quarter profit despite a weaker-than-expected sales decline, forecasting that full-year comparable sales would significantly beat Wall Street expectations, and the market The company’s stock price rose as much as 11% in previous trading.
The mass retailer is counting on same-day service, product launches and new membership programs to drive in-store spending.
Target reported fourth-quarter adjusted earnings of $2.98 per share. In comparison, he earned $1.89 per share in the same period last year. Analysts’ average estimate was $2.42 per share, according to LSEG estimates.
Total comparable sales for the quarter fell 4.4%, compared with analysts’ expectations for a 4.6% decline, due in part to a rebound in sales at Target.com. Online sales in the fourth quarter fell by 0.7%, an improvement from the previous quarter’s 6% decline.
The company said strong Black Friday and Cyber Monday spending boosted sales in the holiday quarter, with shoppers drawn to newly launched collections including Kendra Scott jewelry and the private label Figmint kitchenware line. It is said that
Shoppers also responded to same-day pickup services such as Drive Up, which accounted for more than 10% of total sales in the quarter, the company said.
This quarter marks the end of a difficult year for Target. In the second quarter, Target reported that store visits and comparable sales declined for the first time since before the pandemic as inflation limited Americans’ spending on discretionary items, which account for 50% of Target’s revenue.
Prices for a basket of goods and services continued to rise in January, according to Commerce Department data.
The chain has also faced unique challenges, including a May backlash over LGBTQ-themed products and a spike in retail crimes that led to the closure of nine stores in New York, San Francisco, Seattle and Portland, Oregon. Ta.
Archrival Walmart said last month that although there are signs that discretionary spending is increasing, inflation is forcing shoppers to seek value on everyday items.
Looking forward, Target will focus on rolling out new products and services, including the new Target Circle Membership program, to reignite sales, traffic and market share growth in 2024, Target’s top management said. CEO Brian Cornell said in a statement.
Media reports last month said Target was considering a new paid membership program similar to Amazon’s Prime and Walmart’s Walmart Plus programs.
Target provided its 2024 earnings outlook, saying it expects adjusted earnings to be between $8.60 and $9.60 per share. The midpoint of that range was roughly in line with analysts’ expectations of $9.14 per share, according to LSEG data.
Full-year comparable sales are expected to be in the range of flat to 2% growth this year, compared to analysts’ average estimate of 0.86% growth.
Gross profit margin for the fourth quarter ended February 3 increased to 25.6% from 22.7% a year ago, supported by lower transportation and supply chain costs, healthy inventories and lower markdown rates.
The underlying stock lost some of its gains, trading 8% at $162.50 in pre-market trading. Alex Morris, chief investment officer at F/m Investments, said in an email that the stock is undervalued, with a forward P/E ratio of 16.8 times, slightly below the five-year average of 17.2 times. Ta.
