Target Corporation reported that total comparable sales grew 0.7 percent in the fiscal fourth quarter ended January 28, reflecting comparable store sales growth of 1.9 percent and a comparable digital sales decline of 3.6 percent.

Total revenue for the quarter was $31.4 billion, up 1.3 percent in the fourth quarter compared with the prior-year comparable quarter, driven by sales growth of 1.2 percent and an 8.4 percent increase in other revenue. Same-day services (in-store pickup, Drive Up, and Shipt), which represent more than 10 percent of total sales, increased 4.3 percent in the quarter.

Fourth quarter SG&A expense rate was 18.1 percent in 2022, compared with 17.9 percent in 2021. Full-year SG&A expense rate was 18.9 percent in 2022, compared with 18.6 percent in 2021. Rate increases in both periods reflect the net impact of cost increases across the business, including investments in hourly team member wages, partially offset by lower incentive compensation in 2022 compared to the prior year.

Operating income was $1.2 billion in fourth quarter 2022, down 44.7 percent from $2.1 billion in 2021.

Fourth-quarter GAAP earnings per share of $1.89 a share, compared with $3.21 in 2021. Adjusted EPS1 was $1.89 for the fourth quarter, compared with $3.19 in Q4 2021.

Inventory at the end of the quarter was 3 percent lower than in 2021, despite an increase in early receipts compared with last year. Inventory in discretionary categories was approximately 13 percent lower than a year ago, partially offset by higher inventory in frequency categories.

Full-year sales increased 2.8 percent to $107.6 billion from $104.6 billion last year. Comparable sales grew 2.2 percent for the year, on top of 12.7 percent growth in 2021. Comparable traffic grew 2.1 percent, on top of 12.3 percent in 2021. Full-year total revenue of $109.1 billion grew 2.9 percent compared with 2021, reflecting sales growth of 2.8 percent and a 9.8 percent increase in other revenue.

Total revenue has grown more than $30 billion since 2019.

All five core merchandise categories delivered unit share growth in fiscal 2022, on top of strong share performance over the past several years.

Full-year EPS was $5.98 a share, compared with $14.10a share in 2021. Adjusted EPS1 was $6.02 for the full year, compared with $13.56 in 2021. Full-year 2021 GAAP EPS included a $335 million pretax gain on the sale of Dermstore, which was excluded from Adjusted EPS. Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items.

“We’re pleased that our business delivered comparable sales growth in the fourth quarter, in what continues to be a very challenging environment. Strength in Food & Beverage, Beauty and Household Essentials offset ongoing softness in discretionary categories. This performance highlights the benefit of our multi-category merchandise assortment, which drives relevance with our guests in any environment, and is a key reason we grew traffic every quarter last year,” said Brian Cornell, chairman and chief executive officer of Target Corporation.

“Looking ahead, we’re focused on executing our long-term strategy, including continued differentiation through affordability, assortment, ease and convenience. At the same time, we’re planning our business cautiously in the near term to ensure we remain agile and responsive to the current operating environment. We’re pleased that we entered the year in a very healthy inventory position, reflecting our conservative approach in discretionary categories and our commitment to reliability in our frequency businesses. As we plan for the year ahead, we will continue to make robust capital investments and pursue efficiency opportunities in support of our long-term growth. We’re proud of the loyalty and trust we’ve built with our guests, and want to thank our team for their ongoing commitment to delivering a truly exceptional and differentiated retail experience.”

For the first quarter of 2023, TGT expects comparable sales in a wide range, from a low-single-digit decline to a low-single-digit increase, and an operating income margin rate of 4 percent to 5 percent. First-quarter GAAP EPS and adjusted EPS are both expected to range from $1.50 to $1.90 a share.

For the full year, TGT expects comparable sales in a wide range from a low-single-digit decline to a low-single-digit increase. Operating income is expected to grow by more than $1 billion, and GAAP EPS and adjusted EPS are both expected to range from $7.75 to $8.75.

Over the next three years, TGT expects its operating income margin rate will reach, and begin to move beyond, its pre-pandemic rate of 6 percent, and believes it could reach an operating income margin rate of 6 percent as early as fiscal 2024, depending on the speed of recovery for the economy and consumer demand.

Photo courtesy Target