Target’s Q4 Brings Higher-Than-Expected Sales
While Target saw better-than-expected sales and profitability in its fourth quarter, the retailer is anticipating a tough quarter ahead due to consumer uncertainty and the ongoing threat of tariffs.
During Q4, Target saw total comparable sales increase 1.5%, with comparable-store sales declining 0.5% and comparable digital sales increasing 8.7%. Net sales totaled $30.9 billion, a 3.1% decrease from Q4 in 2023, which included an additional week. Operating income for the quarter was $1.5 billion, a decrease of 21.3% from $1.9 billion in 2023.
"Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter of the year," said Target CEO Brian Cornell. "Results were led by strong performance in beauty, apparel, entertainment, sporting goods and toys. 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.”
[RELATED: Target Introduces 2,000 New Beauty Products]
Continued 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."
For the full fiscal year 2024, Target saw comparable sales grow 0.1%, which reflected the guidance range provided at the beginning of the fiscal year. The beauty segment delivered mid-single digit comparable sales growth, with food and beverage, apparel and essentials also experiencing growth. Additionally, traffic grew 1.4%.
Full-year operating income was $5.6 billion in 2024, a year-over-year decline of 2.5%. Full-year gross margin rate was 28.2%, compared with 27.5% in 2023, which Target says reflects product cost improvements, growth in advertising and marketplace revenues, and lower book-to-physical inventory adjustments.
Throughout the fiscal year, Target opened 23 new stores, as well as several new supply chain facilities, including two new food distribution centers and a flow center.
Moving into FY25, Target expects net sales growth in a range around 1%, reflecting flat comparable sales growth, as well as a modest increase in its operating margin rate compared to FY24.
With a small decline in February net sales and what the company calls “ongoing consumer uncertainty” combined with uncertainty surrounding potential tariffs, Target anticipates profit pressure in Q1 compared to the rest of 2025.
“During February, we saw record performance around Valentines Day. However, our topline 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 CFO Jim Lee. “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. We will continue to monitor these trends and will remain appropriately cautious with our expectations for the year ahead.”
Minneapolis-based Target Corp. is No. 7 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America, with nearly 2,000 locations. PG also included the company on its Retailers of the Century list.
