Target's Profit and Revenue Rise Despite Inflation Impact

Target (TGT) posted better-than-expected quarterly results even though inflation led consumers to switch their shopping habits away from higher-priced discretionary products to lower-priced ones.

The retailer reported earnings per share (EPS) of $2.05, well above analysts’ forecasts. Revenue increased 0.6% to $25.32 billion, a bit more than estimates. Comparable store sales, which include both in store and online purchases, were unchanged from a year ago, with sales at physical stores rising (+0.7%) while digital sales declined (-3.4%).

The company noted strong demand for its “frequency businesses,” which include beauty, food and beverage, and household essentials. It also slashed its inventory, which was down 16% from 2022. 

CEO Brian Cornell said Target came into 2023 “clear-eyed about the challenges consumers are facing,” and responded by leaning into “value and product categories our guests need most right now.”

Target stuck with its full-year guidance of comparable store sales between a low single-digit-percentage decline to a low single-digit-percentage increase, and EPS of $7.75 to $8.75.

Cornell noted the company will be significantly impacted by theft, anticipating “shrink” will reduce profit by more than half a billion dollars this year. He added Target is making “significant investments in strategies” to prevent loss and protect employees and customers. 

The earnings news sent shares of Target 2.6% higher on Wednesday.