Target Corp (TGT, Financial), the nation's sixth-largest retailer, reported its first quarter 2024 financial results, reflecting a mixed performance that aligns with the company's expectations but falls short of analyst estimates. The company, known for its trendy apparel, home goods, and household essentials, operates over 1,950 stores in the United States and fulfills over 2 billion customer orders annually.
Performance Overview
Target Corp (TGT, Financial) reported a diluted earnings per share (EPS) of $2.03 for Q1 2024, slightly below the analyst estimate of $2.04. The company's total revenue for the quarter was $24.5 billion, also missing the estimated revenue of $24.52 billion. This represents a 3.1% decline from the same period last year.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Total Revenue | $24.5 billion | $25.3 billion | -3.1% |
| Operating Income | $1.3 billion | $1.3 billion | -2.4% |
| Net Earnings | $942 million | $950 million | -0.8% |
| Diluted EPS | $2.03 | $2.05 | -1.0% |
Operational Highlights
Target Corp (TGT, Financial) experienced a 3.7% decline in comparable sales, which was in line with expectations. Digital comparable sales grew by 1.4%, with same-day services seeing nearly 9% growth, led by a 13% increase in Drive Up services. However, sales in discretionary categories declined, partially offset by continued growth in the Beauty segment.
The company successfully relaunched its Target Circle loyalty program in April, adding over 1 million new members in the first quarter. Inventory levels at the end of Q1 were 7% lower than the previous year, despite higher in-stock levels.
Financial Achievements
Target Corp (TGT, Financial) reported a first quarter operating income margin rate of 5.3%, a slight improvement from 5.2% in the previous year. The gross margin rate improved to 27.7% from 26.3%, driven by cost improvements and favorable category mix.
SG&A expenses increased to 21.1% of total revenue, up from 19.8% last year, due to higher costs in pay, benefits, and marketing, partially offset by disciplined cost management.
Balance Sheet and Cash Flow
As of May 4, 2024, Target Corp (TGT, Financial) had $3.6 billion in cash and cash equivalents, compared to $3.8 billion at the end of the previous quarter. Inventory levels were at $11.7 billion, down from $11.9 billion in February 2024. The company paid $508 million in dividends during the quarter, reflecting a 1.9% increase in the dividend per share.
Commentary and Outlook
"Our first quarter financial performance was in line with our expectations on both the top and bottom line, tracking the trajectory we outlined for this year and setting up a return to growth in the second quarter," said Brian Cornell, chair and chief executive of Target Corporation.
Looking ahead, Target Corp (TGT, Financial) expects a 0 to 2 percent increase in comparable sales for the second quarter and full year, with GAAP and Adjusted EPS projected to be between $1.95 to $2.35 for Q2 and $8.60 to $9.60 for the full year.
For more detailed information, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Target Corp for further details.
