Target Corporation Reports First Quarter Earnings May 18, 2023

Target Corporation Reports First Quarter Earnings

  • Target sales grew 0.5 percent, reflecting flat comparable sales combined with the benefit of sales from new locations.
    • Traffic grew 0.9 percent, on top of 3.9 percent in Q1 2022.
    • Comparable stores sales grew 0.7 percent, offset by a decline in comparable digital sales.
    • Among the components of comparable digital sales, same-day services saw mid-single digit growth, led by high-single digit growth in Drive-Up.
  • Strength in frequency businesses (Beauty, Food & Beverage and Household Essentials) offset continued softness in discretionary categories.
  • Inventory at the end of Q1 was 16 percent lower than last year, reflecting more than a 25 percent reduction in discretionary categories, partially offset by inventory investments to support rapidly-growing frequency categories and strategic investments to support long-term market-share opportunities.
  • First quarter GAAP and Adjusted EPS of $2.05 and operating margin rate of 5.2 percent, were ahead of expectations, reflecting a higher gross margin rate compared with last year.

Target Corporation announced its first quarter 2023 financial results, which reflected continued traffic and sales growth in an increasingly challenging environment.

The Company reported first quarter GAAP earnings per share (EPS) of $2.05, down 4.8 percent from $2.16 in 2022. First quarter Adjusted EPS1 of $2.05 decreased 6.2 percent compared with $2.19 in 2022. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.

1Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items. See the tables of this release for additional information about the items that have been excluded from Adjusted EPS.

Brian Cornell, chair and CEO of Target Corporation, said, “We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we’ve established with our guests. It’s required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now. Thanks to the team’s dedication, we saw an increase in guest traffic in Q1, with total sales increasing and profitability ahead of expectations.

As we look ahead, we now expect shrink will reduce this year’s profitability by more than $500 million compared with last year. While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue. We are making significant investments in strategies to prevent this from happening in our stores and protect our guests and our team. We’re also focused on managing the financial impact on our business so we can continue to keep our stores open, knowing they create local jobs and offer convenient access to essentials.

For the full year, we are maintaining our full-year financial guidance, based on the expected benefit from efficiency and cost-savings efforts and our team’s continued focus on agility, flexibility and retail fundamentals in the face of continued challenges including inventory shrink. At the same time, we will continue making long-term investments in our stores, supply chain and our team, positioning Target for profitable growth and market-share gains in the years ahead.”

Subscribe to Grocery Insight