Updated at 11:02 AM EST
Target Corp. posted better-than-expected fiscal fourth quarter earnings Tuesday, but warned customers that price increases from tariffs put in place by President Donald Trump will likely arrive in coming days.
Target (TGT) said adjusted earnings for the three months ending on Feb. 3 were $2.41 a share, a 20% decrease from the same period last year but firmly ahead of Wall Street’s consensus forecast of $2.26 a share.
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Group revenues fell 3% to $30.92 billion, Target said, just ahead of analysts’ consensus estimate of $30.82 billion. Same-store sales rose 1.5% from a year earlier, topping the Refinitiv forecast of 1.2%, while digital sales were up 10.8%.
Gross profit margin narrowed 50 basis points to 26.2%, thanks in part to heavy holiday discounting that lowered overall transactions by around 0.6%.
Looking into the current financial year, Target sees comparable sales largely flat with 2024 levels, with profits forecast between $8.80 to $9.80 a share. The group also said it will no longer provide quarterly earnings guidance.
Target CEO Brian Cornell said tariffs on goods from Canada, Mexico and China would likely result in price increases ‘over the next couple of days.’
“As we look ahead, our continued investments in digital capabilities, stores and supply chain — combined with a focus on newness, value, speed and reliability — will further differentiate our one-of-a-kind physical and digital shopping experience,” said CEO Brian Cornell.
“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 build on this distinct competitive advantage and drive long-term profitable growth,” he added.
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Cornell also told CNBC that while Target has diversified its supply chain over the past few years, he still expects price increases on a range of goods “over the next couple of days” following the Trump administration’s introduction of tariffs on goods from key U.S. trading partners.
Target CFO: Cold weather hurts consumer spending
Finance chief Jim Lee also noted that consumer spending trends were starting to soften following a record Valentine’s Day performance for the group, thanks in part because “uncharacteristically cold weather across the U.S. affected apparel sales” and due in part to “declining consumer confidence.”
“Looking ahead, we expect to see a moderation in this trend as apparel sales respond to warmer weather around the country, and consumers turn to Target for upcoming seasonal moments such as the Easter holiday,” Lee added.
“We will continue to monitor these trends and will remain appropriately cautious with our expectations for the year ahead.”
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Last month, Walmart (WMT) topped Wall Street forecasts in its fiscal-fourth-quarter update but issued a muted near-term sales and profit outlook tied to tariff and inflation risks.
“The company noted soft February sales due to unusually cold weather affecting apparel sales and declining consumer confidence, though Valentine’s Day sales were strong, suggesting recent weakness is more weather-related than due to potential DEI boycotts,” said CFRA analyst Arun Sundaram.
“We believe management has taken a conservative approach to guidance, similar to Walmart, given uncertainties around tariffs and consumer spending trends,” he added.
Target shares were marked 5.5% lower in early trading immediately following the earnings release to change hands at $114.10, a move extends the stock’s year-to-date decline to around 16.7%.
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