Target’s revenue of $31.9 billion grew by 1.7% in the fourth quarter of 2023. The chain retailer Target has released its financial earnings. Same-day services, which include in-store pickup, Drive Up, and Shipt, increased by 13.6%.
The Minneapolis-based company’s CEO, Brian Cornell, says their efforts changed the momentum of the business. “[Our efforts] further improved our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations.”
Key takeaways from Q4
Target’s revenue grew by 1.7% in the period under review compared to 2022. But where were the key drivers? The sales growth of 1.6% and 9.8% increase in other revenue are said to have been key drivers.
Other interesting developments include:
- Total comparable sales decine 4.4% in Q4.
- Comparable store sales declined by 5.4%.
- Comparable digital sales declined by 0.7%.
According to the Washington Post, the results beat Wall Street expectations. Nearly 20 analysts were surveyed, and the estimated earnings were $2.41 per share. However, it delivered a profit of $2.98 per share.
The full-year operating income of $5.7 billion in 2023 grew by nearly 50% from $3.8 billion. “Full-year gross margin rate was 26.5 percent, compared with 23.6 percent in 2022,” reads the statement. This reflects lower markdowns and “other inventory-related costs, lower freight costs, and lower supply chain and digital fulfillment costs partially offset by higher inventory shrink.”
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Target says customers “responded to newness, value, and the inspiration,” as well as the in-store and digital shopping experience this quarter.
The Target for the future
Cornell says looking ahead, they will continue to invest in the strengths that helped them deliver strong financial results. “We’ll also roll out fresh innovations, including our new Target Circle membership program.”
He says this is part of the roadmap for growth. “[It’s] aimed at meeting consumers where they are, reigniting sales, traffic, and market share gains, and positioning Target for profitable growth in 2024 and beyond.”
For the first quarter of 2024, Target expects a comparable sales drop of up to 5%. For the first quarter, GAAP and Adjusted EPS are expected to range from $1.70 to $2.10.
New plans for membership
On the same day as releasing the fourth quarter earnings to investors, the retailer announced a new loyalty membership program called Target Circle. This will be introduced next month.
It plans to launch and expand broader owned brands to expand the Target brand. This is to offer a more comprehensive range of options across categories and prices.
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