Target reports mixed Q4 results

Disappointing sales of toys, electronics and home goods made for a somewhat mixed fourth quarter for Target even as the chain maintained its impressive run of same-store sales gains.

Target’s net income grew to $834 million, or $1.63 per share, in the quarter ended Feb. 1, from $799 million, or $1.52 per share, a year earlier. Adjusted earnings came in at $1.69 per share, higher than the $1.66 per share analysts were expecting. 

Total revenue grew 1.8% to $23.40, missing the $23.50 billion analysts had forecast.

In January, Target disclosed slower-than-expected holiday sales as a result of “softer-than-expected performance in key holiday categories, including electronics, toys and portions of its home business.”

“Because these categories account for a much higher portion of sales during the holidays, they have a larger impact on our overall sales growth as compared to the rest of the year,” Target CEO Brian Cornell said in a January statement. 

Same-store fourth-quarter sales rose 1.5%, in line with expectations. It was the discounter’s 11th consecutive quarter of same-store sales increases.

Comparable digital sales grew 20%, lower than the 31% gain Target experienced in the third quarter. 

The retailer credited its same-day services, including same-day pickup in-store, curbside pickup and same-day delivery, as helping to drive sales in the quarter. Same-day services accounted for more than 80% of comparable digital sales growth.

For the full year, Target reported that its revenue rose 3.7% to $78.1 billion, reflecting sales growth of 3.6% and a 6.3% increase in other revenue.

“The strategic investments we've made over the past several years to elevate the shopping experience, curate our multi-category assortment at scale, and deliver ease and convenience through our fulfillment capabilities are deepening our relationship with our guest,” said Brian Cornell, chairman and CEO of Target. "As we look ahead to 2020 and beyond, we are well-positioned to build on this strong foundation to further differentiate Target and drive long-term, profitable growth."

In the first quarter of fiscal 2020, Target expects $1.55 to $1.75 earnings per share and same-store sales growth in the low single digits.  Analysts were looking for earnings of $1.66 per share and same-store sales would 2.7% comp sales growth.