Target delivered better-than-expected earnings for the fourth quarter but warned about a slowdown as consumers continue to focus on necessities.
Shares are still trading about 5% higher in pre-market Tuesday.
Target posted of $1.89 on revenue of $31.4 billion, beating the average analyst estimate for earnings of $1.40 per share on revenue of $30.65B. Overall, sales rose 1.2% compared to the year-ago period while comparable sales grew 0.7%, better than the expected decline of 1.7%.
“This performance highlights the benefit of our multi-category merchandise assortment, which drives relevance with our guests in any environment, and is a key reason we grew traffic every quarter last year,” said Brian Cornell, chairman and chief executive officer of Target Corporation.
Target reported a gross margin contraction of 300 basis points compared to the year-ago period due to higher costs. Analysts were looking for a gross margin of 23.5%, above the reported 22.7%.
The retailer also said that customer transactions grew 0.7% while the average transaction amount was flat for the fourth quarter. Analysts were expecting a decline of nearly 2%. Inventory at the end of the quarter was 3% lower than in 2021, Target said.