Target has recently revealed its fiscal fourth-quarter results, surpassing expectations despite the looming uncertainties surrounding consumer spending and tariffs that are anticipated to impact its profit in the current quarter. The company's adjusted earnings reported a decline to $2.41 per share for the quarter ending February 1, down from $2.98 the previous year, although this exceeded the FactSet consensus of $2.26.
Meanwhile, sales decreased to $30.92 billion, a drop from $31.92 billion last year, yet still outperformed Wall Street's anticipated figure of $30.78 billion. The retail giant observed a 1.5% growth in comparable sales, aligning with average analyst estimates, propelled by a 2.1% increase in the number of transactions.
CEO Brian Cornell reflected optimism about the performance, highlighting strong results in key categories such as beauty, apparel, entertainment, sporting goods, and toys, stating, 'Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter of the year.' However, Target anticipates a 'meaningful' pressure on year-over-year profit for the first quarter of fiscal 2025, influenced by consumer uncertainty and a slight decline in sales from the previous month.
This is compounded by uncertainties around President Donald Trump's tariff policy and the implications of upcoming costs. In premarket activity, Target's shares experienced a 3.9% drop. The newly implemented 25% tariffs on Canadian and Mexican imports and the recent doubling of levies on Chinese imports from 10% to 20% represent significant factors influencing Target's market environment.
CFO Jim Lee noted that sales in February were subdued, significantly affected by adverse weather conditions across the United States, which dampened apparel sales and eroded consumer confidence in discretionary spending. Nonetheless, Lee mentioned that Target witnessed 'record performance' during Valentine's Day. Looking forward, the company expects a moderation in current trends, anticipating improved apparel sales as warmer weather takes hold nationwide, alongside shoppers turning to Target for significant seasonal events such as Easter.
Lee remarked, 'We will continue to monitor these trends and will remain appropriately cautious with our expectations for the year ahead.' As for fiscal 2025, Target projects adjusted earnings per share to fall within a range of $8.80 to $9.80, slightly below the prior year’s $8.86. Analysts are estimating a non-GAAP EPS of $9.27, with sales growth forecasted around 1% and comparable sales growth expected to be flat.
Current market projections suggest total sales of $109.02 billion, with same-store sales increasing by 1.6%. In a Tuesday note, Truist Securities warned, 'This will likely be the company's third year in a row of flat or declining comparable sales, and we believe Target may eventually be compelled to implement significant price investments to reclaim market share.' For fiscal 2024, Target reported a slight sales decline of 0.8%, totaling $106.57 billion, although comparable sales saw a marginal increase of 0.1%..