Minneapolis – Target delivered better-than-expected fourth-quarter earnings but cautioned about ongoing economic uncertainty, particularly regarding consumer confidence and the impact of President Trump’s tariff policies.
For the full fiscal year, Target projects 1% net sales growth, with comparable sales expected to remain flat. In the recently concluded fiscal year, which ended on February 1, net sales declined 0.8% to $106.6 billion. However, excluding the extra week in the 2023 fiscal year, net sales edged up 1%.
Home and Apparel Sales Performance
Total home sales for the year reached $16.7 billion, though Target did not provide a year-over-year comparison in its investor presentation. Despite strong sales around Valentine’s Day, the new fiscal year started on a weaker note in February due to cold weather impacting apparel sales and declining consumer confidence affecting discretionary purchases.
“During February, we saw record performance around Valentine’s Day. However, our top-line performance for the month was soft, as uncharacteristically cold weather across the U.S. affected apparel sales, and declining consumer confidence impacted our discretionary assortment overall,” said Jim Lee, Chief Financial Officer.
Reducing Dependence on China
Target has been actively reducing its reliance on China for private label production. In 2017, China accounted for 60% of its owned-brand sourcing, but that figure has now dropped to 30%, with plans to reduce it further to just over 20% this year. Apparel production in China has already declined to 17%, according to Rick Gomez, Chief Commercial Officer.
Q4 Performance Highlights
During the fourth quarter, Target reported:
- Net sales decline of 3.1% to $30.9 billion
- Comp sales up 1.5%, driven by strong in-store traffic
- Digital sales growth of 8.7%
- Earnings per share near the high end of guidance
Despite the overall decline in net sales, Target saw stronger-than-expected performance in toys, electronics, and apparel.
“Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter of the year,” said Brian Cornell, Chair and CEO. “Consumers continue to be drawn to the everyday discovery and delight that only Target can deliver, and we’re committed to leveraging our strategy, scale, and unique position in retail to drive long-term profitable growth.”
