Ugly sweater display, OMG! Santa Claus! I know Him! from the movie Elf, on display at Target Store, Queens, New York.
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Goal on Thursday raised its fourth-quarter sales forecast as more consumers turned to its stores and website for holiday shopping – especially on days known for deep discounts.
The big-box retailer now expects comparable sales to grow about 1.5% in the fiscal fourth quarter. That's better than the most recent expectation that the metric would be roughly flat. Comparable sales include sales on Target's website and stores open at least 13 months.
Still, the Minneapolis-based discounter didn't boost its profit outlook — an indication that deals were motivating shoppers. Target expects fourth-quarter earnings per share to range from $1.85 to $2.45 and full-year earnings per share to range from $8.30 to $8.90. Target will report full fourth-quarter earnings results on March 4.
Target cut its profit forecasts in early November after posting its biggest profit loss in two years, blaming some of its problems on weaker durable goods sales and the costs of preparing for a short-lived crisis. port strike in October.
Target's report is the latest look at a pivotal season for the industry. Data so far shows things have gone better than feared, but investors are unimpressed. Lululemon, Abercrombie & Fitch And American EagleFor example, they all raised their fourth-quarter outlook on Monday, but shares of some of those companies traded lower that day.
Black Friday sale signs are seen at a Target store in Chicago on November 26, 2024, ahead of the Black Friday shopping day.
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Northstream on Friday raised its full-year revenue forecast, but only after conservative previous guidance. And department store rival Macy's said Monday that sales will be at or slightly below the lows aforementioned range of between $7.8 billion and $8.0 billion.
The industry's largest trade group, the National Retail Federation, is expected to release its holiday sales summary on Thursday.
Discounts and sale events are here to stay a key sales driver as consumers emerge from more than two years of high inflation. It's unclear how much these deals will cut into the profit margins of Target and other retailers, and whether sales will continue to improve as the promotions disappear.
In the combined months of November and December, total sales rose 2.8% and comparable sales rose 2% year over year, according to Target. Digital sales grew by almost 9% compared to the holiday period a year ago.
Some of Target's growth areas contributed to holiday sales. Its subscription service, Target Circle 360, contributed to a more than 30% year-over-year increase in same-day deliveries in November and December. Sales through the company's third-party marketplace, Target Plus, grew nearly 50% during that time.
Guest traffic increased nearly 3% during the two holiday months compared to the prior year period, while online and in-person visits increased, the company said. Target said December marked the eighth straight month of year-over-year traffic increases.
Target has made aggressive moves to attract selective buyers. In May, it said it would cut prices on about 5,000 frequently purchased items, including diapers, bread and milk. And then in October it announced a new wave of price cuts on more than 2,000 items during the holiday season, including cold medicine, toys and ice cream. The company said this would amount to more than 10,000 items with price cuts this year by the end of the holiday season.
Black Friday signs at a Target store ahead of Black Friday in Smyrna, Georgia, US, on Tuesday, November 21, 2023.
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In a press release Thursday, Target said Black Friday and Cyber Monday saw record high sales. The company said its discretionary categories, especially apparel and toys, saw “meaningful sales acceleration” compared to the fiscal third quarter. These categories typically have a higher margin than essentials like milk and paper towels, but are often on sale during the holiday season.
In remarks at the NRF's annual “Big Show” conference Monday, Target Chief Operating Officer Rick Gomez said the company saw a sharp increase in sales on promotional days such as Circle Week, an event in early October that coincided with Amazon Prime Day.
“It was one of our biggest Circle Weeks that we ever had,” he said. 'But the sales before the week and the sales after the week were lower. There was a dip in turnover. The consumer was very intentional.”
He said American consumers are “working on a budget” but are still willing to spend money on special moments like vacations or on a “must-have item.” For example, the retailer sold nearly 1 million copies of Taylor Swift's hardcover book about The Eras Tour, he said.
On Thursday, Target also announced several changes to its leadership team that will take effect in early February. Chief Stores Officer Mark Schindele is retiring after 25 years at Target and will be replaced by Adrienne Costanzo, who is currently Senior Vice President of Store Operations.
Chief Information Officer Brett Craig will retire after 15 years at Target and be replaced by Prat Vemana, the company's Chief Digital and Product Officer. And Sarah Travis will become the company's Chief Digital and Revenue Officer, a new leadership role, after serving as senior vice president of Roundel, Target's advertising business and social commerce.
Target recently got a new Chief Financial Officer: Jim Lee, the former Deputy Chief Financial Officer of PepsiCo, who stepped into the role at the end of September. He succeeded Michael Fiddelke, who is now Target's chief operating officer.
Target is also on track for a leadership change at the top of the company. In the fall of 2022, Target's longtime CEO, Brian Cornell, agreed to stay for three more years, in a move that required the company's board to eliminate the retirement age. Target has not yet announced when his contract expires or who will be his successor.