Target navigates tricky holiday season, posts strong outlook
Target pushed through headwinds — from inflation to congested ports — to deliver solid results for the three-month period that included the crucial holiday shopping season
NEW YORK — Target pushed through headwinds — from inflation to congested ports — to deliver solid results for the three-month period that included the crucial holiday shopping season.
Fourth-quarter profit rose nearly 12%, sales increased 9.4% and the Minneapolis retailer on Tuesday released an upbeat revenue outlook for 2022.
Retailers are facing rising costs for everything from labor to shipping as supply chain backups hit companies worldwide. Target, because of its size, was able to charter vessels and fill its shelves ahead of the holiday shipping crunch.
Yet Target was not unscathed and cost pressures from 2021 are carrying over into this year.
Gross margins fell from 26.8% during the fourth quarter of 2020, to 25.7% in the most recent quarter. And Target said Tuesday that margins in the first quarter will be lower last year.
That did not phase investor who drove shares up more than 11% before the opening bell.
Net income for the quarter that ended Jan. 29 reached $1.54 billion, or $3.21 per share. Adjusted earnings per share for the latest quarter was $3.19, easily topping the $2.85 that industry analysts were looking for, according to FactSet. It also topped last year’s fourth-quarter profit of $1.38 billion, or $2.73 per share.
Revenue was $31 billion compared with Wall Street projections of $31.32 billion.
The company registered an 8.9% increase in sales at stores opened at least a year, while online sales rose 9.2%. More than 95% of Target’s fourth-quarter sales were fulfilled by its stores.
Target expects low- to mid-single digit revenue growth for the current fiscal year.
That comes as the retailer Target aims to recruit and hold on its workers with higher pay. The company announced Monday that it will adopt minimum wages that range from $15 to $24 an hour, with the highest pay going to hires in the most competitive markets. It currently pays a universal starting wage of $15 an hour.
The company is also expanding its partnerships with various brands. Last year, it began rolling out Ulta Beauty shops in its stores as part of a deal with the beauty retailer. It plans to eventually have shops in 800 of its stores.
Target has roughly 1,900 stores and 350,000 employees in the U.S.
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