Target (NYSE:TGT) is set to report its Q4 earnings, and while the retailer posted stronger-than-expected holiday sales, analysts believe it may take a cautious tone on guidance.
The company previously reported holiday sales rose 2.8%, with comparable sales up 2% and record-breaking Black Friday and Cyber Monday sales. Traffic grew nearly 3%, with digital sales up 9% year-over-year. December also marked eight straight months of year-over-year traffic growth. Target saw a notable holiday sales boost in discretionary categories like apparel and toys, along with continued strength in beauty and frequency categories.
However, Morgan Stanley warns that discretionary demand has softened, and rising SG&A costsincluding liability and healthcare expenses could weigh on profitability. The firm also flagged policy uncertainties around tariffs and immigration as potential risks.
Another key focus will be succession planning. CEO Brian Cornell marked his 10th anniversary at the company last August, with Target's stock more than doubling during his tenure. Analysts will be watching for any updates on long-term leadership plans.
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