US retailer Target has reported strong performance in the fourth quarter (Q4) of fiscal 2024 (FY24), driven by increased foot traffic, growth in digital sales and improved discretionary categories.
The company experienced a modest rise of 1.5% in total comparable sales. This was despite a slight 0.5% decrease in comparable store sales, offset by an 8.7% uptick in comparable digital sales.
The apparel and hardlines sectors saw a near-four-percentage-point acceleration in comparable sales trends over Q3.
Net sales of $30.91bn in Q4 saw a decline of 3.1% from the $31.91bn achieved in the corresponding quarter of the previous fiscal year, which had benefited from an extra week.
The retailer’s operating income for Q4 FY24 stood at $1.46bn - a 21.3% reduction from the $1.86bn reported in the same period of FY23.
During the three months to 1 February 2025, net earnings for Target also fell by 20.2%, down to $1.10bn from $1.38bn in Q4 FY23.
This translates to diluted earnings per share (EPS) of $2.41, aligning closely with the upper end of the company's projected range, buoyed by unexpectedly robust top-line performance, especially in the toys, electronics and apparel categories.
Target chair and chief executive officer Brian Cornell stated: "Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter of the year. As we look ahead, our continued investments in digital capabilities, stores and supply chain — combined with a focus on newness, value, speed and reliability — will further differentiate our one-of-a-kind physical and digital shopping experience. Consumers continue to be drawn to the everyday discovery and delight that only Target can deliver, and we're committed to leveraging our strategy, scale and unique position in retail to build on this distinct competitive advantage and drive long-term profitable growth."
In the fiscal year 2024, Target's comparable sales growth was a slight 0.1%, fitting within the forecast range set at the start of the fiscal year.
The company's annual net sales dipped 0.8%, falling from $107.41bn to $106.56bn in FY23.
Customer traffic rose by 1.4%, with both stores and digital channels contributing to this increase.
Annual net earnings decreased by 1.1% to $4.09bn compared to $4.13bn in the preceding fiscal year.
Full-year EPS stood at $8.86, within the original guidance range for the year, again reflecting stronger-than-anticipated top-line performance during Q4.
Since 2023, Target has realised cost savings surpassing $2bn through ongoing efficiency initiatives.
The company anticipates net sales growth around 1%, with comparable sales expected to be flat for the fiscal year 2025.
It also foresees a modest improvement in operating margin rate compared to full-year 2024, and projects generally accepted accounting principles and adjusted EPS between $8.80 and $9.80.
Target chief financial officer Jim Lee stated: “Looking ahead, we expect to see a moderation in this trend as apparel sales respond to warmer weather around the country, and consumers turn to Target for upcoming seasonal moments such as the Easter holiday. We will continue to monitor these trends and will remain appropriately cautious with our expectations for the year ahead.”
In February 2025, the US state of Florida initiated a lawsuit against Target, claiming that the company’s misrepresentation of its diversity and social initiatives led to significant financial losses for shareholders.
