Tajet (TGT.US) Q4 performance exceeds expectations, same-store sales decline for the third consecutive quarter.

Before the stock market opened on Tuesday, Target (TGT.US) released its 2023 fourth quarter performance. The financial report showed that Target's Q4 total revenue was $31.92 billion, an increase of 1.7% year-on-year, beating analyst expectations of $31.83 billion; of which, sales were $31.47 billion, an increase of 1.6% year-on-year. Net profit was $1.382 billion, an increase of 57.8% year-on-year; adjusted earnings per share were $2.98, beating analyst expectations of $2.42, compared to $1.89 in the same period last year. Gross margin was 25.6%, higher than the 22.7% in the same period last year. Comparable store sales decreased by 4.4%, slightly better than analyst expectations of a 4.5% decrease, but this is the third consecutive quarter of decline. The number of transactions decreased by 1.7%, better than the 4.1% decrease in the third quarter. Due to inflation and rising interest rates, consumers have less disposable income, and Target has been struggling to address the issue of declining sales. This shift in demand has led Target and other retailers to lower prices on products, which has impacted profits. Target's inventory at the end of the fourth quarter decreased by 12% year-on-year, better than analyst expectations, indicating that the company faces less risk of markdowns. In addition, the decline in online sales for the company has narrowed, and lower shipping and supply chain costs have helped boost its profits. Furthermore, Target confirmed that it will launch a membership program to compete with competitors such as Amazon (AMZN.US) Prime and Walmart's Walmart+. Target has also been seeking to upgrade its stores, testing large stores to fulfill online orders and opening more mini stores like Ulta Beauty in its stores. Looking ahead, Target expects same-store sales for the full year of 2024 to remain flat to grow by 2%, with analysts expecting a growth of 0.8%; the expected adjusted earnings per share for 2024 are $8.60 to $9.60, compared to analysts' expectations of $9.15. The company also expects same-store sales in the first quarter of 2024 to decline by 3% to 5%, with analysts expecting a 3.6% decline; expected adjusted earnings per share for the first quarter are $1.70 to $2.10, compared to analysts' expectations of $2.08. In this earnings season, U.S. retailers are more optimistic about the economy. Walmart stated that its confidence in the economy has improved, with market share increasing in almost all categories in the last quarter. Best Buy (BBY.US) expects the consumer electronics industry to resume growth, thereby increasing its sales and operating profit. The market expects that as inflation slows down, consumers will be more motivated to purchase non-essential items, which could boost Target's sales and profits in 2024. Wall Street analysts expect Target's sales to grow by about 1% in 2024. Facing competition from retailers such as Temu and Shein, Target is taking measures to attract consumers who like to buy low-priced items. In January of this year, Target launched a low-priced private label brand called "Dealworthy," with most products priced under $10, covering clothing, accessories, beauty products, electronics, and home goods. Analysts at Jane Hali & Associates pointed out that Target is also focusing on products that can stimulate frequent consumer purchases, such as beauty products, food, and beverages.