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

Target (TGT) posted fiscal fourth quarter results ahead of market open on Tuesday, beating estimates as consumer spending shifts away from discretionary categories.

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

Target stocks rose more than 3.5% in pre-market trading following the release of the report.

Target CEO Brian Cornell said the team was pleased with the sales growth in what is still a “very challenging environment.”

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

  • Gain: $31.40 billion versus $30.46 billion expected

  • Adjusted earnings per share: $1.89 versus $1.48 expected

  • Sale in the same store: 0.7% versus -1.74% expected

Cornell said offering multiple categories, including food and beverage (which it began offering in 2010 after the Great Recession), in addition to beauty and home goods served the retailer well last quarter, Cornell said.

“Strong in Food & Beverage, Beauty and Household Essentials offset continued softness in discretionary categories. This performance highlights the benefit of our multi-category merchandise range, which drives relevance to our guests in every environment, and is a key reason why we every quarter last year.”

Same-store sales beat estimates, up 0.7% compared to expectations of a 1.74% decline. Same-store sales at physical locations also received a boost, up 1.9%, while digital sales fell 3.6% in the fourth quarter.

At the end of the fourth quarter, inventory was 3% lower than in 2021. Meanwhile, inventory in discretionary categories such as electronics, home, and apparel was nearly 13% lower than in 2021, “partially offset by higher inventory in frequency categories.”

For full-year 2022 results, revenue grew $3 billion to $109 billion. Compared to 2019, sales have increased by more than $30 billion. For the full year, same-store sales increased 2.2%, while traffic increased 2.1%.

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

‘Planning our business carefully’

Looking ahead to fiscal 2023, Cornell said the retailer is focused on its long-term strategy and “ongoing differentiation through affordability, assortment, convenience and convenience” as it competes with other retailers for consumers who want less.

“At the same time, we are prudently planning our business in the short term to ensure we remain agile and responsive to the current work environment…as we plan for the year ahead, we will continue to make robust capital investments and pursue efficiencies opportunities to support our long-term growth.”

For the first quarter of 2023, the company expects a broad range of same-store sales, from a low-single-digit decline to a low unified increase, and an operating profit margin of 4-5%. Adjusted earnings per share are expected to range between $1.50 and $1.90. For fiscal year 2023, the company expects same-store sales to be the same, from low-single-digit increases to low-single-digits, along with operating income of more than $1 billion and adjusted earnings per share of $7.75. to $8.75.

Over the next 3 years, the company aims to push beyond its pre-pandemic operating profit margin of 6%, saying it could potentially reach that goal as early as fiscal 2024, “depending on the speed of recovery for the economy and consumers.” ask.”

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

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