by - Target will report fiscal fourth-quarter earnings before noon on Tuesday.
- The big-box retailer has missed earnings expectations for three consecutive quarters and warned of soft holiday sales.
- It will hold a conference call with analysts at 9 a.m. ET and will also host an investor day in New York City.
A Target department store on June 7, 2022 in Miami, Florida. Target announced that it expects profits to take a short-term hit as it marks down unwanted items, cancels orders and takes aggressive steps to get rid of excess inventory.
Joe Raedle | Getty Images
Target on Tuesday will report results for the holiday quarter, as retailers prepare for a year that looks set to bring lower sales and more price-conscious shoppers.
Here’s what analysts expect for Target’s fiscal fourth quarter, according to consensus estimates from Refinitiv:
- Adjusted earnings per share: expected USD 1.40
- Revenue: $30.7 billion expected
The big-box retailer, known for selling cheaper but fashion-forward clothing, home goods and more, saw a surge in sales during the first two years of the pandemic. Annual total revenue grew by about $28 billion — or about 36% — from fiscal 2019 to 2021.
Yet over the past year, Target has faced a shift in both sales trends and market sentiment. The discount retailer has become an industry poster child for inventory problems, squeezed profit margins and concerns for inflation-squeezed middle-income consumers. The company has missed Wall Street’s earnings expectations for three straight quarters and warned investors to expect soft holiday sales.
Target’s stock has fallen nearly 40% from its all-time closing high. It closed Monday at $166.81 a share, bringing its market capitalization to nearly $77 billion. So far this year, however, the shares have risen by approx. 12%, outpacing the nearly 4% rise in the S&P 500.
Alongside its fourth-quarter financial results, Target is expected to share full-year guidance at an investor day in New York City.
So far, traders have delivered a cautious outlook for the year ahead. Walmart said last week it expects same-store sales to rise between 2% and 2.5% excluding fuel for its US operations, with the growth coming from inflation rather than an increase in unit volume. Elsewhere, Home Depot missed revenue expectations for the first time since November 2019 and said it expects full-year sales growth to be roughly flat.
Target is more vulnerable than its archrival Walmart. Grocery accounts for just 20% of Target’s sales, while Walmart gets more than half of its sales from the frequency drive category. It’s also known for “Target runs,” or trips that inspire shoppers to fill up their carts with discretionary items and impulse buys along with the item they went to the store for—a habit that may not last as consumers return to busier schedules, use money on restaurants and other services and keep a closer eye on their budgets.
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