Target reported strong holiday sales but maintained profit forecasts due to heavy discounts impacting earnings
They had record sales on Black Friday and Cyber Monday, which is great news. Because of that, they’ve upped their sales growth forecast for the next few months. But even with all that, they’re keeping their profit predictions the same. It seems like those discounts were a big part of the sales boost.
Target’s shares dipped a bit after the news, which is kind of surprising. They had a rough patch earlier this year, missing earnings expectations and cutting their profit forecast. They said shoppers are being more cautious, probably because of inflation and other costs.
The holiday shopping season is crucial, and it’ll show if people are still willing to spend after all this inflation. Other retailers like Lululemon and Abercrombie also raised their forecasts, but their stocks didn’t do so well either.
In November and December, Target saw total sales jump by 2.8%, and their same-store sales rose by 2%. Digital sales were up nearly 9%, which is pretty impressive. Their same-day delivery service, Target Circle 360, grew by 30%, and their third-party marketplace, Target Plus, saw about 50% growth.
Traffic to their stores and website also increased by 3%, marking eight months of gains. To attract more customers, Target slashed prices on thousands of items, which seems to have worked out for them.
But while sales are up, those discounts might be eating into their profits. It’s unclear if shoppers will keep spending once the deals are gone. They had a big sales week that coincided with Amazon’s Prime Day, but sales dipped before and after that week.
Target is also making some changes at the executive level, with a few retirements and new appointments coming in February. They’re gearing up for the future, especially with their CEO’s contract situation still up in the air.
