Target Q4 earnings beat estimates, CEO strikes cautious tone as consumer spending shifts

Target ( TGT ) released fiscal fourth-quarter results before the market opened on Tuesday that beat estimates as consumer spending deviated from discretionary categories.

The Minneapolis-based retailer saw same-store sales increase 0.7%, above Wall Street estimates of -1.74%. Similar to Walmart’s ( WMT ) latest quarterly results, consumer spending at Target appears to be shifting toward consumer goods like food and away from categories like electronics, home, and clothing.

Shares of Target jumped more than 3.5% in premarket trading after the report was released.

Target CEO Brian Cornell said the group is pleased with the sales growth in what continues to be a “challenging environment.”

Here’s what Target reported, compared to Wall Street estimates, based on Bloomberg consensus data:

  • Entrance fee: $31.40 billion versus $30.46 billion expected

  • Fixed points in each section: $1.89 between $1.48 expected

  • Same-store sales: 0.7% and -1.74% are expected

Cornell said having multi-category offerings, including food & beverage (which it began offering in 2010 after the Great Recession), in addition to beauty and home goods served retailers well last quarter, said Cornell.

“Strengths in Food & Beverage, Beauty and Home Essentials balance the ongoing flexibility in the range of sensitivities. This project showcases the benefits of a wide variety of products, which creates a fit together and visitors in every season, and it is the main reason that we increase the traffic every time. last quarter.”

Estimated same-store sales rose 0.7% compared to expectations for a 1.74% decline. Same-store sales at physical locations also grew, up 1.9%, while digital sales fell 3.6% in Q4.

At the end of Q4, the estimate was 3% lower than in 2021. Meanwhile, in sensitive categories such as electronics, home and clothing, the estimate was about 13% lower than in 2021,” it was partially adjusted by the highest load in the frequency range.”

For the fiscal year 2022 full year, revenue increased by $3 billion, to $109 billion. Compared to 2019, revenue increased by more than $30 billion. In the full year, sales of Store sales increased by 2.2%, while traffic increased by 2.1%.

We’re Hiring Flags, starting at $17 per hour, Target Store, Boston, Massachusetts. (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)

‘Plan our business carefully’

Looking ahead to fiscal 2023, Cornell said the retailer is focused on its long-term strategy and “continues to differentiate itself through affordability, variety, convenience and convenience” as it competes with other retailers for buyers and sellers.

“Also, we are planning to conduct our business in a very careful way in the near future to ensure that we continue to maintain the current state of operations. opportunity to support our long-term growth.”

In the first quarter of 2023, the company expects a wide range of same-store sales, from a decrease in the number of units to a small increase, and an operating margin of 4-5%. Adjusted EPS is expected to be between $1.50 and $1.90. For fiscal year 2023, the company expects same-store sales to be flat, from low numbers to modest growth, with operating income of more than $1 billion and adjusted EPS to range from $7.75 to $8.75.

Over the next 3 years, the company aims to exceed the pre-pandemic margin of 6%, and said it may achieve this goal by the beginning of fiscal 2024, “depending on the rapid recovery of the economy and consumer. demand.”

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or by email at

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