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NEW YORK (AP) — TGT" target="_blank">Target (TGT) on Wednesday reported another quarterly profit decline and issued a cautious sales and profit outlook for the current period.
The Minneapolis-based discounter is dealing with rising costs — it cited theft as a big factor — and consumers who have become more cautious about their spending.
Still, Target's fiscal first-quarter results beat Wall Street expectations.
Target is among the first major U.S. retailers to report first-quarter results, and retail industry analysts will be looking to see how stubbornly high inflation and tightening credit are impacting shoppers. Walmart, Macy’s and Nordstrom are slated to report later this week or next.
Home Depot, the nation's largest home improvement retailer, on Tuesday, forecast its first decline in annual revenue since 2009.
Target's results follow a government report on retail sales that showed Americans picked up their spending modestly last month, buoyed by a solid job market and a retreat in prices for some things. But the figures show shoppers are barely keeping up with inflation.
Target said that its first-quarter net income slipped nearly 6% to $950 million, or $2.05 per share, for the three-month period ended April 29. That compares with $1.01 billion, or $2.16 per share, in the year-ago period.
Total sales rose 0.6% to $25.32 billion in the quarter, up from $25.17 billion in the year-ago quarter. Analysts expected earnings of $1.77 per share on $25.26 billion in sales in the latest period, according to FactSet.
The period marked the fifth-consecutive quarter that the retailer’s profit slipped, although the decrease was much smaller this time. Target reported a 43% drop in profits for the fourth quarter, a 52% drop in third-quarter profits, 90% in the second quarter and a 52% decline in last year's first quarter.
Target said it expects its earnings per share to be in a range from $1.30 to $1.70 in the current quarter. Analysts were expecting $1.95 per share, according to FactSet. For the full year, the company is maintaining its prior guidance.
Target said theft is hurting its profitability, and predicted more than $500 million in losses from shoplifting this year, on top of the $650 million in losses it incurred during its last fiscal year. The company said it's seeing an increasing number of violent incidents at stores and doesn't want to close stores because that hurts workers and the community. The retailer said it's embracing different measures, from expanding security to locking up certain items.
First-quarter comparable sales — or those from stores or digital channels operating for the past 12 months — were flat compared with the year-ago period. Customer traffic was up, but shoppers focused on buying necessities like health and beauty and groceries over non-essentials. Comparable stores sales grew 0.7% but comparable online sales declined.
“We came into 2023 clear-eyed about what consumers were facing with persistent inflation and rising interest rates,” Target CEO Brian Cornell said during a media call Tuesday.
Given this competitive environment, Target is continuing to make investments in stores and online.
The discounter said in early March that it plans to invest as much as $5 billion this year expanding services for customers, including a drive-up service for returns, renovations at 175 stores and improvements in online shopping.