Key Takeaways:
Target will announce its holiday-quarter results and outlook for the year before the market opens on Tuesday.- Analysts surveyed by LSEG predict earnings per share of $2.41 and revenue of $31.83 billion for the quarter.
- Target executives will conduct a call with analysts at 9 a.m. ET following the earnings release.
- During the call, they will discuss the company’s performance and offer insights into its future prospects and strategies.
Target is expected to announce its holiday-quarter results and provide its outlook for the upcoming year on Tuesday. Wall Street analysts surveyed by LSEG, formerly known as Refinitiv, have shared their expectations for the company’s fourth quarter. They anticipate earnings per share of $2.41 and revenue of $31.83 billion.
Target’s performance will be closely watched as it sells a significant amount of discretionary merchandise, including clothing and home goods. The company has experienced declining comparable sales for two consecutive quarters. Comparable sales, also known as same-store sales, are an important industry metric that measures sales growth while accounting for factors such as store openings, closures, and renovations.
Target had previously anticipated a continuation of its declining sales trend, even during the holiday season. In November, the company projected a mid-single-digit drop in comparable sales for the fiscal fourth quarter, with adjusted earnings per share ranging between $1.90 and $2.60.
To appeal to value-focused shoppers, Target has emphasized low prices and high-frequency categories such as food and beauty. During the holiday season, the retailer highlighted a wide range of toys and gifts priced under $25. Additionally, Target recently introduced a new low-priced private brand called Dealworthy, featuring items like socks, paper towels, and laundry detergent, with most items priced under $10.
However, compared to its big-box competitor Walmart, Target faces the challenge of groceries representing a smaller portion of its business. While groceries drive about 20% of Target’s annual sales, they make up nearly 60% of Walmart’s annual sales in the U.S. Grocery sales typically generate foot traffic and steady sales, even during times when consumers are cutting back on other discretionary spending categories.
Some of Target’s stores are also experiencing a loss of a separate traffic driver: pharmacies. CVS Health announced in January its plans to close certain locations within Target stores as part of CVS’s broader strategy to reduce its store count. However, neither CVS nor Target disclosed the specific number of pharmacies slated for closure.
On Tuesday, Target will convene a financial meeting with investors in New York City.
Year-to-date, Target’s shares have risen by nearly 6%, falling short of the approximately 8% gains observed in the S&P 500 during the same period. As of Monday’s close, Target’s shares were priced at $150.49 each, resulting in a market value for the company of nearly $70 billion.
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