Target hedges on guidance as tariffs roll out

MINNEAPOLIS – Although Target posted better-than-expected fourth-quarter earnings this morning, it warned of “uncertainty” around both consumer confidence and President Trump’s tariff actions.

For the full fiscal year, it is projecting 1% net sales growth, with comp sales for the year projected to come in flat. During the most recent fiscal year, which ended Feb. 1, Target’s net sales declined 0.8% to $106.6 billion. Excluding the extra week in the 2023 fiscal year, net sales inched up 1%.

Total home sales for the year came in at $16.7 billion. Target did not provide a year-over-year comparison in its investor presentation today.

Tariffs aside, the new fiscal year got off to a wobbly start last month.

“During February, we saw record performance around Valentine’s Day. However, our top-line performance for the month was soft, as uncharacteristically cold weather across the U.S. affected apparel sales, and declining consumer confidence impacted our discretionary assortment overall,” said Jim Lee, chief financial officer.

Target has been steadily shifting production of its private label brands out of China, where it was sourcing 60% in 2017. Today, China produces about 30% of owned brands, and the company plans to bring that down to just above 20% this year. Apparel penetration in China is already down to 17%, according to Rick Gomez, chief commercial officer.

During the fourth quarter, net sales fell 3.1% to $30.9 billion, with comp up 1.5% on strong traffic and an 8.7% increase in digital comp sales. Earnings per share came in near the high end of Target’s guidance. The company saw a stronger-than-expected topline performance, particularly in toys, electronics and apparel.

“Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter of the year,” said Brian Cornell, chair and CEO. “Consumers continue to be drawn to the everyday discovery and delight that only Target can deliver, and we’re committed to leveraging our strategy, scale and unique position in retail to build on this distinct competitive advantage and drive long-term profitable growth.”

See also:

• NRF chief economist says Washington policies “blur” the economic outlook
• Experts on alert as consumer confidence takes big hit in February