Target Corporation saw comparable sales decline 3.7 percent year-over-year in the fiscal 2024 first quarter, reflecting a comparable store sales decline of 4.8 percent, partially offset by a comparable digital sales increase of 1.4 percent.

  • Digital comparable sales grew 1.4 percent.
  • Same-day services grew nearly 9 percent, led by more than 13 percent growth in Drive Up.
  • Sales declines, primarily in discretionary categories, were partially offset by continued growth in Beauty.
  • Discretionary sales trends continued to improve vs. prior quarters, led by an improvement of nearly 4 percentage points in apparel compared to Q4 of 2023.

Total revenue for the quarter was down 3.1 percent year-over-year to $24.5 billion, which reflects a total sales decline of 3.2 percent and a 3.9 percent increase in other revenue.

First quarter gross margin rate was 27.7 percent of net sales, compared with 26.3 percent in 2023, said to reflect the net impact of merchandising activities, including cost improvements that more than offset higher promotional markdown rates, combined with favorable category mix and lower book to physical inventory adjustments as compared to the prior-year quarter.

First quarter SG&A expense rate was 21.1 percent in 2024, compared with 19.8 percent in 2023, reflecting the combined impact of lower sales and higher costs, including continued investments in pay and benefits and marketing, partially offset by disciplined cost management.

First quarter operating income of $1.3 billion was 2.4 percent lower than last year, driven by lower sales volume.

First quarter operating income margin rate was 5.3 percent in 2024, compared with 5.2 percent in 2023.

First quarter operating income margin rate of 5.3 percent reflects a 140 basis point improvement in gross margin rate compared to the prior year.

Target Corporation reported first quarter GAAP and Adjusted earnings per share of $2.03 in Q1, compared with $2.05 per share in the 2023 Q1 period.

Interest Expenses and Taxes
The company’s first quarter 2024 net interest expense was $106 million, compared with $147 million last year, primarily driven by an increase in interest income reflecting higher cash balances year-over-year.

First quarter 2024 effective income tax rate was 22.7 percent, compared with the prior year rate of 21.1 percent, reflecting lower discrete benefits than the preceding year.

Inventory at the end of Q1 was 7 percent lower than the end of Q1 last year, even as the company saw higher in-stock levels than a year ago.

“Our first quarter financial performance was in line with our expectations on both the top and bottom line, tracking the trajectory we outlined for this year and setting up a return to growth in the second quarter,” said Brian Cornell, chair and chief executive, Target Corporation. “Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services. Consumers continue to respond to the newness and value that we offer across our shopping experience, and we’re pleased with early results from the relaunch of Target Circle. Looking ahead, our team will deliver for our guests through lower prices, a seasonally relevant assortment, ease and convenience as we keep investing in our strategy and efficiency initiatives to get back to growth and deliver on our longer-term financial goals.”

Guidance
For the second quarter, the company expects a 0 to 2 percent increase in its comparable sales and GAAP and Adjusted EPS of $1.95 to $2.35 per share.

For the full year, the company continues to expect a 0 to 2 percent increase in its comparable sales and GAAP and Adjusted EPS of $8.60 to $9.60 per share.

Image courtesy Target