Target reports earnings from holiday sales in early Q4 2024

Target on Thursday raised its fourth-quarter sales forecast after more consumers turned to stores and websites for holiday shopping — especially on days known for deep discounts.

The major retailer now expects comparable sales to rise about 1.5% in the fiscal fourth quarter. That’s better than his last prospect, which will be the metric approximately equal. Comparable sales include sales on Target’s website and at stores open at least 13 months.

Still, the Minneapolis discounter did not change its profit forecast — a sign that the deals are motivating shoppers. Target expects fourth-quarter earnings per share of $1.85 to $2.45 and full-year earnings per share of $8.30 to $8.90. Target will report full fourth-quarter earnings on March 4.

Target cut profit forecast in early November after it posted its biggest decline in revenue in two years and blamed some of its problems on softer sales of discretionary goods and costs to prepare for a short-term port strike in October.

Target’s report is the latest look at an important season for the industry. So far, the data suggests that things have gone better than feared, but investors have not been impressed. Lululemon, Abercrombie & Fitch and American eaglefor example all raised their forecasts for the fourth quarter Monday, but shares of some of those companies traded lower that day.

Nordstrom on Friday raised its full-year sales forecastbut only after a preliminary conservative forecast. And a department store competitor Macy’s on Monday said its sales would be at or slightly below record lows a previously stated range of $7.8 billion to $8.0 billion.

The industry’s main trade group, the National Retail Federation, is expected to release holiday sales results on Thursday.

Discounts and sales remain a significant driver of sales as consumers emerge from more than two years of high inflation. It’s unclear how much the deals will cut into the profitability of Target and other retailers, or whether sales will continue to improve as the promotions fade.

In the combined months of November and December, Target said total sales increased 2.8% and comparable sales rose 2% year-over-year. Digital sales were up nearly 9% over last year’s holiday period.

Some of Target’s growth areas were fueled by holiday sales. His subscriber serviceTarget Circle 360, contributed to a more than 30% increase in same-day deliveries in November and December compared to last year. Sales through Target Plus’s third-party marketplace grew by nearly 50% during that time.

Guest traffic increased nearly 3% over the two holiday months compared to the same period last year as online and in-person visits increased, the company said. Target said December marked its eighth consecutive month of year-over-year traffic growth.

Target has made aggressive moves to attract selective shoppers. In May, it was said that it would happen reduce prices on about 5,000 frequently purchased itemsincluding diapers, bread and milk. And then he announced another wave of price cuts in October on more than 2,000 holiday season items, including cold medicine, toys and ice cream. The company said this year it will have more than 10,000 discounted items by the end of the holiday season.

In a news release Thursday, Target reported record sales on Black Friday and Cyber ​​Monday. The company said discretionary categories, particularly apparel and toys, saw “significant sales acceleration” compared to the fiscal third quarter. Margins in these categories tend to be higher than staples like milk and paper towels, but they often go on sale during the holiday season.

Speaking Monday at NRF’s annual “Big Show” conference, Target Chief Operating Officer Rick Gomez said the company has seen a sharp jump in sales on promotional days like Circle Week, an event in early October that coincided with Amazon Prime Day.

“It was one of our biggest Circle Weeks that we’ve ever had,” he said. “But sales before the week and sales after the week were lower. There was a drop in sales. The consumer was very intentional.”

He said American consumers are “operating on a tight budget” but are still willing to spend on special occasions such as holidays or “must-have items”. For example, the retailer has sold nearly 1 million copies of Taylor Swift’s The Eras Tour hardcover book, he said.

On Thursday, Target also announced several changes to its leadership team that will take effect in early February. Chief Store Officer Mark Schindele will retire after 25 years with Target and will be replaced by Adrienne Costanza, who is currently Senior Vice President of Store Operations.

Chief information officer Brett Craig will retire after 15 years at Target and will be replaced by Pratt Vemana, the company’s chief digital and product officer. And Sarah Travis will become the company’s chief digital and revenue officer, a new leadership role after serving as senior vice president of Roundel, Target’s advertising and social commerce business.

Target recently got a new chief financial officer: Jim Lee, the former CFO of PepsiCo, who took over at the end of September. He succeeds Michael Fidelke, who is now Target’s chief operating officer.

Target is also on the verge of a leadership change at the top of the company. In the fall of 2022, longtime Target CEO Brian Cornell agreed to stay for another three years in a move that required the company’s board to scrap the retirement age. Target has not yet announced when his contract ends or who will succeed him.