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Target’s earnings surge despite holiday sales dip, sees sales recovery in 2024
SW Retail Advisors Founder Stacey Widlitz talks about Macy’s shuttering 150 stores and gives her top retail pick on ‘The Claman Countdown.’
Target on Tuesday reported higher holiday-quarter earnings on a smaller-than-expected sales decline and predicted that annual comparable sales would come in largely above Wall Street expectations, sending its shares up as much as 11% in premarket trading.
The mass merchandiser is banking on same-day services, product launches and a new membership program to boost spending at its stores.
Target reported adjusted earnings of $2.98 per share in the fourth quarter, compared to $1.89 per share in the same period a year earlier. Analysts on average expected $2.42 per share, according to LSEG estimates.
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Total comparable sales in the November to January period fell 4.4% compared with the 4.6% decline analysts were expecting, in part due to a recovery in sales on Target.com. Online sales fell 0.7% during the fourth quarter, an improvement from the 6% decline in the previous quarter.
Robust Black Friday and Cyber Monday spending helped drive holiday-quarter sales, the company said, and shoppers gravitated to newly launched collections such as Kendra Scott jewelry and its private-label Figmint line of kitchenware.
Shoppers also responded to same-day pickup services, such as Drive-up, which made up more than 10% of total sales in the quarter, the company said.
The quarter marks the end of a challenging year for Target. During the second quarter, Target reported its first decline in store visits and comparable sales since before the pandemic as inflation limited Americans’ spending on discretionary items, which accounts for 50% of Target’s revenue.
Commerce Department data showed that prices on a basket of goods and services continued to tick up in January.
The chain also faced unique challenges including a backlash in May over its LGBTQ-themed merchandise and a surge in retail crime that it said led to the closure of nine stores in New York, San Francisco, Seattle, and Portland, Oregon.
Bigger rival Walmart said last month that inflation is driving shoppers to hunt for value on everyday goods, though there are signs that discretionary spending is picking up.
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Looking ahead, Target will focus on rolling out new products and services, including a new Target Circle membership program, to reignite sales, traffic and market share gains in 2024, Target’s CEO Brian Cornell said in a statement.
Media reports last month said Target was weighing a new paid membership program similar to Amazon’s Prime and Walmart’s Walmart Plus program.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TGT | TARGET CORP. | 150.49 | -4.80 | -3.09% |
| WMT | WALMART INC. | 59.33 | +0.58 | +0.99% |
| AMZN | AMAZON.COM INC. | 177.58 | -0.64 | -0.36% |
Target introduced its earnings outlook for 2024, saying it expects adjusted earnings between $8.60 to $9.60 per share. The midpoint of that range was largely in line with analysts’ expectations of $9.14 per share, according to LSEG data.
Annual comparable sales are expected to be in a range of flat to up 2% this year, compared to analysts’ average expectations of a 0.86% rise.
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Gross margins in the fourth quarter ended Feb. 3 rose to 25.6%, from 22.7% a year earlier, aided by lower freight and supply-chain costs, healthy inventory and lower markdowns.
Target shares lost some of their gains to trade up 8% to $162.50 in pre-market trading. The stock is undervalued, trading at 16.8 times forward earnings, just below its 5-year average of 17.2 times, Alex Morris, chief investment officer of F/m Investments said in an email.
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As we look ahead to 2024, many homeowners and prospective buyers are wondering what to expect when it comes to mortgage rates. The landscape of the housing market is constantly changing, so it’s important to stay informed about trends and predictions. In this blog post, we will discuss some factors that could impact mortgage rates in 2024 and what homeowners and buyers can expect.
One factor that could impact mortgage rates in 2024 is the overall state of the economy. If the economy is strong and growing, we may see higher mortgage rates as the Federal Reserve looks to combat inflation. On the other hand, if the economy is stagnant or in a recession, we may see lower mortgage rates as the Fed looks to stimulate growth. It’s important to keep an eye on economic indicators such as GDP growth, unemployment rates, and inflation to get a sense of where mortgage rates may be heading.
Another factor that could impact mortgage rates in 2024 is Federal Reserve policy. The Fed plays a key role in setting interest rates, and their decisions can have a ripple effect on mortgage rates. If the Fed decides to raise interest rates in response to inflation, we may see an increase in mortgage rates. Conversely, if the Fed decides to lower interest rates to stimulate growth, we may see a decrease in mortgage rates. Keeping up with the latest news and announcements from the Fed can give homeowners and buyers a sense of where mortgage rates may be heading.
In terms of specific cities and local mortgage companies, it’s important to note that mortgage rates can vary depending on location and lender. For example, in a city like New York City, where real estate prices are high, mortgage rates may be higher compared to a city like Indianapolis, where real estate prices are lower. Additionally, local mortgage companies may offer competitive rates and terms compared to national lenders. For example, in New York City, local lenders like Quontic Bank and CrossCountry Mortgage may offer specialized products and services tailored to the needs of local buyers.
It’s important for homeowners and buyers to shop around and compare rates from multiple lenders to ensure they are getting the best deal. Websites like Bankrate and LendingTree can be helpful resources for comparing rates and terms from multiple lenders. Homeowners and buyers should also consider working with a mortgage broker who can help them navigate the lending process and find the best mortgage product for their needs.
In conclusion, predicting mortgage rates in 2024 is not an exact science, but there are several factors that could impact rates. By staying informed about economic indicators, Federal Reserve policy, and local market trends, homeowners and buyers can make informed decisions about their mortgage. Shopping around and comparing rates from multiple lenders is key to ensuring you are getting the best deal on your mortgage. Whether you’re looking to refinance your existing mortgage or buy a new home, it’s important to stay informed and be proactive in managing your mortgage.
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