Traffic was up; shoppers focused on everyday essentials
MINNEAPOLIS — Target Corp. said sales increased 0.5% in its first quarter, with strength in everyday essentials offsetting continued softness in sales of discretionary items.
Beauty was Target’s best-performing category in the quarter to April 29, with sales growing in the mid-teens from a year earlier. Food and beverage sales increased in the high single digits. Sales of household essentials increased in the low single digits.
Traffic increased 0.9%. Comparable-store sales increased 0.7%, despite a year-on-year decline in digital comps, which were affected by the shift away from the discretionary items that are a significant component of the merchandise delivered to shoppers’ homes.
Customers who did shop online boosted Target’s same-day services, which were led by high single-digit growth in Drive Up. The company said orders for same-day curbside pickup tend to include more everyday essentials.
First-quarter earnings declined to $950 million, or $2.05 a share, from $1.01 billion, or $2.16 per share, a year earlier. Still, the per-share earnings topped the $1.76 projection for the quarter.
Revenue was $25.32 billion versus the expected $25.29 billion.
Target reiterated its full-year outlook. Management expects comps will range from a low-single-digit decline to a low-single-digit increase. Target projects full-year earnings in the range of $7.75 a share to $8.75 a share.
“We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we’ve established with our guests. It’s required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now,” said Brian Cornell, chair and chief executive officer at Target.
Added Cornell, “As we look ahead, we now expect shrink will reduce this year’s profitability by more than $500 million compared with last year. While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue. We are making significant investments in strategies to prevent this from happening in our stores and protect our guests and our team. We’re also focused on managing the financial impact on our business so we can continue to keep our stores open, knowing they create local jobs and offer convenient access to essentials.
“For the full year, we are maintaining our full-year financial guidance, based on the expected benefit from efficiency and cost-savings efforts and our team’s continued focus on agility, flexibility and retail fundamentals in the face of continued challenges including inventory shrink. At the same time, we will continue making long-term investments in our stores, supply chain and our team, positioning Target for profitable growth and market-share gains in the years ahead.”
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