In this article, Target raised its fourth-quarter sales forecast on Thursday as more consumers shopped at its stores and website during the holiday season, especially on days with significant discounts. The retailer now expects comparable sales in the fiscal fourth quarter to increase by approximately 1.5%, an improvement from its previous estimate of flat growth. Comparable sales include sales from Target’s website and stores open for at least 13 months.
Despite the sales increase, Target did not revise its profit outlook, indicating that promotions were driving consumer purchases. The company projects fourth-quarter earnings per share to range from $1.85 to $2.45 and full-year earnings per share between $8.30 and $8.90. Target will release its full fourth-quarter earnings results on March 4.
Target had lowered its profit guidance in early November due to weaker sales of discretionary items and costs related to a brief port strike in October. The retail industry’s performance during the holiday season has been closely watched, with some companies like Lululemon, Abercrombie & Fitch, and American Eagle revising their fourth-quarter outlooks. However, investors have not been impressed, as stock prices of some companies fell despite positive outlooks.
According to the National Retail Federation (NRF), holiday retail sales increased by 4% year over year to reach $994.1 billion from November 1 to December 31. NRF Chief Economist Jack Kleinhenz noted that consumer spending during the holiday season resembled pre-pandemic growth, driven partly by lower inflation compared to the previous year. Despite the increase in spending, consumers remained budget-conscious and continued to seek deals.
Target reported a 2.8% increase in total sales and a 2% rise in comparable sales year over year for November and December combined. Digital sales grew by nearly 9% compared to the previous holiday period. The company attributed some of its holiday sales growth to initiatives like the Target Circle 360 subscription service and the Target Plus third-party marketplace.
Target’s efforts to attract customers included price cuts on thousands of items throughout the year, with a focus on essentials like diapers and groceries. The company highlighted record-high sales during Black Friday and Cyber Monday, with strong performance in discretionary categories such as apparel and toys. Target’s Chief Operating Officer Rick Gomez mentioned a sales spike during promotional events like Circle Week and emphasized consumers’ intentional spending habits.
Target also announced leadership changes, including the retirement of Chief Stores Officer Mark Schindele and Chief Information Officer Brett Craig. New appointments include Adrienne Costanzo as Chief Stores Officer, Prat Vemana as Chief Information Officer, and Sarah Travis as Chief Digital and Revenue Officer. The company’s new Chief Financial Officer, Jim Lee, took over in late September, succeeding Michael Fiddelke, who became Target’s Chief Operating Officer.
Looking ahead, Target’s CEO Brian Cornell agreed to extend his tenure for three more years, with a leadership transition expected in fall 2022. The company has yet to announce the end date of Cornell’s contract or his successor.
