Shares of Target Corp (NYSE:TGT) are trading lower in premarket on Tuesday after the fourth-quarter FY24 earnings.

The company reported a fourth-quarter sales decline of 3.1% year-on-year to $30.91 billion, beating the analyst consensus estimate of $30.84 billion.

Comparable sales increased 1.5% in the fourth quarter, reflecting strong traffic and digital performance. Digital comparable sales grew 8.7%.

Adjusted EPS of $2.41 beat the consensus estimate of $2.26.

Gross margin for the quarter contracted by 40 basis points to 26.2%, reflecting higher digital fulfillment and supply chain costs and higher promotional and clearance markdown rates.

Operating income margin rate of 4.7% was 110 basis points lower than last year, and the operating income for the quarter plunged 21.3% to $1.47 billion.

The company held $4.7 billion in cash and equivalents as of February 1. Operating cash flow for twelve months totaled $7.4 billion.

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Inventory as of February was $12.74 billion, compared to $11.8 billion last year. The company paid dividends of $513 million in the fourth quarter, compared with $508 million last year.

As of the end of the fourth quarter, TGT had approximately $8.7 billion of remaining capacity under the repurchase program approved by the Board of Directors in August 2021.

“Our team grew traffic and delivered better-than-expected sales and profitability in our biggest quarter of the year,” said chair and chief executive officer Brian Cornell.

“Results were led by strong performance in Beauty, Apparel, Entertainment, Sporting Goods and Toys. As we look ahead, our continued investments in digital capabilities, stores and supply chain—combined with a focus on newness, value, speed and reliability—will further differentiate our one-of-a-kind physical and digital shopping experience.”

Outlook: Target expects FY25 adjusted EPS of $8.80 – $9.80 versus an estimate of $9.31. It sees comparable sales to be flat. The company sees FY25 sales growth to be around 1%.

Due to continued consumer uncertainty, a slight drop in February net sales, tariff instability, and the anticipated timing of certain expenses throughout the fiscal year, the company expects to face significant year-over-year profit challenges in the first quarter compared to the rest of the year.

“During February, we saw record performance around Valentines Day. However, our topline 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.

Price Action: TGT shares traded lower by 1.88% at $118.49 in premarket at last check Tuesday.

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