Target prepares to position for growth despite drop in FY sales

US department store giant Target Corporation announced its fourth quarter and full-year 2023 results, with both periods seeing a notable drop in sales despite coming ahead of expectations.

For the quarter, comparable sales fell 4.4 percent, reflecting a comparable stores sales decline of 5.4 percent, while full year sales also decreased 1.7 percent to 105.8 billion dollars from 107.6 billion in the year prior.

Revenue, meanwhile, grew 1.7 percent to 31.9 billion dollars, akin to a full year drop of 1.6 percent to 107.4 billion dollars. Operating income, meanwhile, came to 5.8 percent for the fourth quarter, compared to 3.7 percent in the same period last year. For the year, this grew 48.3 percent, increasing from 3.8 billion dollars to 5.7 billion dollars.

Fourth quarter gross margin rate was 25.6 percent, compared with 22.7 percent in 2022, with lower markdowns and other inventory-related costs cited as the cause. For the full-year, the gross margin rate totaled 26.5 percent, up from 23.6 percent in 2022.

In a release, Brian Cornell, chairman and CEO of Target, said: "Our team's efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations.”

In terms of outlook, for the first quarter Target is expecting a comparable sales decline of 3 to 5 percent, with GAAP and adjusted EPS to be in the range of 1.70 to 2.10 dollars.

For the full year, the company is forecasting a “modest increase” in comparable sales in a range from flat to 2 percent.

On the outlook, Cornell said: “Looking ahead, we'll continue to invest in the strengths and differentiators that have delivered strong financial performance over time.

“We'll also roll out fresh innovations, including our new Target Circle membership program, as part of our roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024 and beyond."