Target Reports Holiday Sales for Early Fourth Quarter 2024

Target On Thursday, its fourth-quarter sales forecast was raised after more consumers turned to its stores and website to do their Christmas shopping, particularly on days known for deep discounts.

The big-box retailer now expects its fiscal fourth-quarter comparable sales to increase about 1.5%. That’s better than its most recent forecast that the measure would be roughly stable. Comparable sales include sales on Target’s website and stores open at least 13 months.

Still, the Minneapolis-based discounter did not raise its profit outlook — an indication that the deals motivated shoppers. Target expects fourth-quarter earnings per share to be between $1.85 and $2.45 and full-year earnings per share to be between $8.30 and $8.90. Target will report its full fourth-quarter results on March 4.

Target lowered its profit forecast in early November after posting its biggest revenue shortfall in two years and blaming some of its problems on slowing sales of discretionary products and the costs of preparing for a short-lived crisis. port strike in October.

Target’s report is the latest insight into a crucial season for the industry. So far, the data suggests things have gone better than expected, but investors haven’t been impressed. Lululemon, Abercrombie & Fitch And American Eaglefor example, all raised their fourth-quarter outlook on Monday, but shares of some of those companies traded lower that day.

Nordstrom On Friday, it raised its full-year sales forecast, but only after a conservative earlier outlook. And rival of department stores Macy’s said Monday that its sales would be at or slightly below the bottom of its previously stated range between $7.8 billion and $8.0 billion.

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

Discounts and sales remained a an important sales driver, as consumers emerge from a period of more than two years of high inflation. It’s unclear how much these deals will reduce profit margins for Target and other retailers, or whether sales will continue to improve if the promotions disappear.

During the combined months of November and December, Target said, total sales increased 2.8% and comparable sales increased 2% year over year. Digital sales increased nearly 9% compared to last year’s holiday season.

Some of Target’s growth areas contributed to holiday sales. Its subscription service, Target Circle 360, contributed to a more than 30% year-over-year increase in same-day deliveries in November and December. Sales through the company’s third-party marketplace, Target Plus, increased nearly 50% during that period.

Visitor traffic increased nearly 3% during the two-month holiday compared to last year, driven by increases in online and in-person visits, the company said. Target said December marked the eighth consecutive month of year-over-year traffic gains.

Target has taken aggressive steps to attract selective shoppers. In May, it announced it would cut prices on about 5,000 frequently purchased items, including diapers, bread and milk. And then, in October, it announced another round of price cuts on more than 2,000 items during the holiday season, including cold medicine, toys and ice cream. The company said that would amount to more than 10,000 items with price reductions this year by the end of the holiday season.

In a press release Thursday, Target said Black Friday and Cyber ​​Monday saw record sales. The company said discretionary categories, particularly clothing and toys, saw a “significant acceleration in sales” compared to the fiscal third quarter. These categories tend to have higher margins than essentials such as milk and paper towels, but often go on sale during the holiday season.

In a speech Monday at NRF’s annual “Big Show” conference, Target COO Rick Gomez said the company has seen a big increase in sales. during promotional days like its Circle Week, an event in early October that coincided with Amazon Prime Day.

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

He said American consumers “work on a budget” but are still willing to spend on special moments like the holidays or on a “must-have item.” For example, the retailer has sold nearly a million copies of Taylor Swift’s hardback book The Eras Tour, he said.

On Thursday, Target also announced several changes to its leadership team that will begin to take effect in early February. Mark Schindele, director of stores, will retire after 25 years at Target and will be replaced by Adrienne Costanzo, who currently serves as senior vice president of store operations.

Chief information officer Brett Craig will retire after 15 years at Target and will be replaced by Prat 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 business and social commerce.

Target recently named a new CFO: Jim Lee, the former deputy CFO of PepsiCo, who took over at the end of September. He succeeded Michael Fiddelke, now Target’s chief operating officer.

Target is also on track for a leadership change at the top of the company. In the fall of 2022, Target’s longtime CEO Brian Cornell agreed to stay on for three more years, forcing the company’s board to waive the retirement age. Target has not yet announced the end date of his contract or who his successor will be.