Target posted weaker-than-expected first-quarter earnings and a sales drop Wednesday, following a slowdown in spending as inflation-weary shoppers continued to keep their budgets in check, causing shares of the discount chain to fall in pre-market trading.
DALY CITY, CALIFORNIA - DECEMBER 14: Customers wait in line to make purchases at a Target store on ... [+]
Target recorded adjusted earnings per share of $2.03, down from $2.05 year on year and worse than $2.06 analysts expected.
Total revenue was $24.53 billion in the first quarter ended May 4, down 3.1% from $25.32 billion in the same period last year.
First-quarter comparable sales—meaning those from stores and digital channels operating for at least 12 months—were down 3.7%, marking the fourth straight quarter of decline.
The slowdown in sales was primarily in discretionary categories like home decor and electronics but partially offset by a continued growth in beauty, the company said, adding sales of clothing improved compared to Q4 of 2023.
The Minneapolis-based company’s net income came in weaker, at $942 million compared to $950 million in the same quarter in 2023.
The number of transactions and average amount spent at Target stores and digital channels were both down 1.9% in the first quarter, compared to a traffic growth of 0.9% and a decline of 0.9% in average transaction amount in the comparable period last year.
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Target stock was down more than 9% to about $141 per share in Wednesday’s pre-market trading, following Wednesday’s report.
Target’s revenue fell slightly last year for the first time in seven years following a weaker growth in visitor numbers that hit retail businesses across the United States. Despite headline inflation easing in April at 3.4%, some American shoppers were seen cutting back on money spent on non-essential items. In March 2024, the big-box retailer re-introduced its free loyalty program, Target Circle, and also launched a paid membership program that allows customers to get free same-day delivery on orders over $35 in as little as an hour at $99 a year. These initiatives were aimed to stimulate demand and rival existing paid membership programs by Amazon Prime and Walmart+.
1 million. That’s how many new members joined Target Circle, the retailer’s free loyalty program that was relaunched in April, in the first quarter.
Target announced Monday it had already slashed prices on about 1,500 everyday items, with up to 5,000 price cuts planned this summer. Target joined other retailers such as Aldi and Ikea, which previously reduced prices to attract inflation-weary shoppers.
The company expects comparable sales for the second quarter to be unchanged or increase by at most 2%, and forecasts adjusted earnings per share to range between $1.95 to $2.35.