In This Article:
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Net Sales: Declined 2.8% in Q1.
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Comparable Sales: Decreased by 3.8%.
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Traffic: Declined 2.4%.
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Average Ticket: Down 1.4%.
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GAAP EPS: $2.27, including $0.97 benefit from litigation resolution.
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Adjusted EPS: $1.30, compared to $2.03 last year.
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Gross Margin: 28.2%, about 60 basis points lower than last year.
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SG&A Rate: Reported at 19.3%, underlying rate at 21.7%.
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Operating Margin: 6.2%, including 250 basis points benefit from legal settlements.
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Inventory: Up 11% year-over-year.
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Digital Sales Growth: Mid-single-digit growth, with 36% growth in same-day delivery.
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CapEx: $790 million in Q1, full-year expected near lower end of $4 billion to $5 billion range.
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Store Openings: Added three new locations, on track to open around 20 for the year.
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Store Remodels: Strong comp lifts of 2% to 4% following remodels.
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Full-Year Adjusted EPS Guidance: Updated to $7 to $9.
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Full-Year GAAP EPS Guidance: Updated to $8 to $10.
Release Date: May 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Target Corp (NYSE:TGT) reported mid-single-digit growth in its first-party digital business, with a notable 36% increase in same-day delivery powered by Target Circle 360.
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The company saw strong performance in its limited-time design partnership with Kate Spade, marking the most successful collaboration in over a decade.
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Target Corp (NYSE:TGT) experienced progress in inventory shrink, with rates moderating from extreme levels encountered in previous years.
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The company is investing in new stores, ongoing remodels, and technology, which are expected to support long-term growth.
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Target Corp (NYSE:TGT) is expanding its Target Plus marketplace, with a 20% growth in GMV this quarter, adding hundreds of new partners to the platform.
Negative Points
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Target Corp (NYSE:TGT) faced a 2.8% decline in net sales for the first quarter, driven by a decrease in traffic and lower average basket size.
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The company experienced pressure from higher markdowns and digital fulfillment costs, impacting its gross margin.
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Target Corp (NYSE:TGT) is dealing with ongoing challenges in discretionary categories due to declining consumer confidence and high inflation.
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The company anticipates continued sales pressure and tariff impacts, which could affect profitability in the near term.
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Target Corp (NYSE:TGT) is taking actions to right-size inventory, which may lead to incremental markdowns and receipt adjustment costs in the second quarter.
Q & A Highlights
Q: Is your expectation that comps turn positive in the back half or by the fourth quarter? And will the inventory adjustment cost be behind you such that gross margin will be up? A: We expect low single-digit declines for the balance of the year, including Q4. The inventory and receipt adjustment costs are expected to occur mostly in the first half of the year, and we should be through that by the second half.