In This Article:
Key Takeaways
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Core retail sales rose 4% YOY to a record $994.1 billion, surpassing the National Retail Federation's forecast.
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A strong holiday season surge saw Target lift its sales forecast to 1.5% growth from the previous year.
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Stocks such as Five Below, Genesco and Abercrombie & Fitch saw strong holiday sales gains.
The holiday season is a make-or-break time for retailers, as consumer spending trends during this period can significantly impact performance. For Target Corporation TGT, the festive season turned out to be a blissful one. The retailer registered better-than-expected performance buoyed by continued traffic growth. With its seamless shopping experience and value-oriented, in-demand products, Target was quick to attract customers both in stores and online.
Target also performed exceptionally during key promotional periods, with record-high sales on Black Friday and Cyber Monday contributing to its overall performance. Stellar holiday sales prompted this Minneapolis-based retailer to lift its comparable sales forecast for the final quarter of fiscal 2024. However, TGT maintained its profit outlook.
Target’s remarkable holiday surge places it alongside Five Below, Inc. FIVE, Genesco Inc. GCO and Abercrombie & Fitch Co. ANF. The 2024 holiday season saw core retail sales rise 4% year over year to a record $994.1 billion, surpassing the National Retail Federation’s forecast of $979.5-$989 billion and breaking the 2023 record of $955.6 billion.
A Sneak Peek Into TGT’s Holiday Performance
Target's total sales for the months of November and December increased by 2.8% compared with the previous year, reflecting a comparable sales growth of 2%. The company saw a notable uptick in traffic, with an increase of nearly 3%, driven by strong performances both in-store and across digital platforms. This reflected a continued trend of positive traffic growth, with December marking the eighth consecutive month of year-over-year increases.
Digital sales grew 9% compared with the same period last year. A major driver of this growth was the same-day delivery service — powered by Target Circle 360 — which experienced more than 30% growth. Target’s third-party marketplace, Target Plus, experienced an impressive 50% increase. This growth demonstrates the increasing importance of digital channels in driving overall sales, with more than 97% of Target’s sales being fulfilled by stores.
When comparing performance to the third quarter, Target observed a meaningful acceleration in discretionary categories during the holiday period. Apparel and toys saw a significant increase in sales, while beauty and other frequency categories continued to show strength. These results reflect consumers' preference for both seasonal and everyday items, positioning Target as a one-stop destination for shoppers.
For the fourth quarter, Target now anticipates comparable sales growth of approximately 1.5%, better than its earlier forecast of flat comparable sales. However, this Zacks Rank #5 (Strong Sell) company continues to anticipate GAAP and adjusted earnings per share (EPS) for the fourth quarter to range from $1.85 to $2.45, with full-year GAAP and adjusted EPS estimated to be between $8.30 and $8.90.