Target reports Q4, full-year results
Target today announced its fourth-quarter and full-year 2023 results, both of which benefited from an additional week of sales as compared to 2022.
The company reported fourth-quarter GAAP and adjusted earnings per share of $2.98, compared with $1.89 in 2022. GAAP and Adjusted EPS were $8.94 for full-year 2023, compared with $5.98 in GAAP EPS and $6.02 in Adjusted EPS in the prior year.
"Our team's efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations," said Brian Cornell, chairman and chief executive officer of Target.
Cornell added, "Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we'll continue to invest in the strengths and differentiators that have delivered strong financial performance over time. We'll also roll out fresh innovations, including our new Target Circle membership program, as part of our roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024 and beyond."
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For the first quarter 2024, Target expects a comparable sales decline of 3% to 5%. First quarter GAAP and Adjusted EPS are both expected to range from $1.70 to $2.10.
For the full year, the retailer expects a modest increase in comparable sales in a range from flat to 2%. GAAP EPS and Adjusted EPS are both expected to range from $8.60 to $9.60.
Target's total comparable sales declined 4.4% in the fourth quarter, reflecting comparable stores sales declines of 5.4% and a comparable digital sales decline of .7%. Total revenue of $31.9 billion grew 1.7% in the fourth quarter compared with 2022, driven by sales growth of 1.6% and a 9.8% increase in other revenue. Sales growth reflected an additional week in fiscal year 2023. Operating income was $1.9 billion in fourth quarter 2023, an increase of 60.9% from $1.2 billion in 2022.
Target's full-year sales decreased 1.7% to $105.8 billion from $107.6 billion last year, reflecting a 3.7% decrease in comparable sales. The decrease was partially offset by sales from non-mature stores and an additional week in 2023. Full-year total revenue of $107.4 billion decreased 1.6% compared with 2022, reflecting a 1.7% decline in sales. The decline was partially offset by a 5.1% increase in other revenue, Target said.
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The retailer's fourth quarter operating income margin rate was 5.8% in 2023 compared with 3.7% in 2022. Fourth quarter gross margin rate was 25.6%, compared with 22.7% in 2022, reflecting lower markdowns and other inventory-related costs, lower freight costs, lower supply chain and digital fulfillment costs and favorable category mix. Shrink costs were lower than a year ago, as continued increases in store loss rates were more than offset by the timing of inventory accruals compared with 2022.
Target's full-year operating income of $5.7 billion in 2023 grew 48.3% from $3.8 billion last year. Full-year gross margin rate was 26.5%, compared with 23.6% in 2022, reflecting lower markdowns and other inventory-related costs, lower freight costs and lower supply chain and digital fulfillment costs partially offset by higher inventory shrink.