• Revenue Growth: Target expects to drive more than $15 billion in revenue growth over the next five years.
• Beauty Sales Growth: Nearly 7% sales growth and share gains in the Beauty category.
• Apparel Share Gains: Apparel grew share over the last three quarters.
• Digital Business Growth: $20 billion digital business with nearly 9% growth in Q4.
• New Store Openings: Plans to open more than 20 new stores in 2025.
• Target Plus Marketplace: $1 billion marketplace growing at a double-digit pace.
• Traffic Growth: 2%-plus traffic growth in Q4 and a 20% uptick in traffic since 2019.
• Target Circle Membership: Added 13 million members in 2024.
• Q4 Comparable Sales: 1.5% increase in Q4 comp sales.
• Q4 EPS: Reported Q4 GAAP and adjusted EPS of $2.41.
• 2024 Net Sales Growth: Approximately 1% growth over 2023.
• 2024 EPS Growth: Approximately 3% growth over 2023, adjusting for the 53rd week in 2023.
• Target Plus GMV Growth: More than 35% growth in third-party GMV on Target Plus last year.
• Roundel Growth: Mid-teens growth in Roundel ad business.
• Operating Margin Rate: Expecting a modest increase in operating margin rate in 2025.
• Capital Expenditure: Expected CapEx of $4 billion to $5 billion in 2025.
• Dividend Increase: Plan to recommend a low single-digit increase in the quarterly dividend.

• Warning! GuruFocus has detected 5 Warning Signs with TGT.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Target Corp (NYSE:TGT) reported a 1.5% increase in Q4 comp sales, exceeding initial expectations.
• The company plans to invest $4 billion to $5 billion in stores, supply chain, and technology to enhance consumer experience.
• Target Plus, the company's marketplace, has grown by 35% in the past year and is expected to reach $5 billion in GMV over the next five years.
• Target's digital business is profitable and continues to grow, with nearly 9% growth in Q4.
• The company has seen significant growth in its loyalty program, Target Circle, which added 13 million members in the past year.

Negative Points

• Target Corp (NYSE:TGT) experienced a sales decline in February due to economic uncertainty and consumer caution in discretionary spending.
• The company faces challenges with inventory levels, which were up over 7% at the end of Q4.
• There is ongoing volatility in consumer spending, particularly in discretionary categories, impacting predictability.
• Target is dealing with potential tariff impacts, which could affect pricing and supply chain dynamics.
• The company anticipates outsized profit pressures in Q1 due to tariff uncertainty and startup costs from new stores and remodel projects.

Q & A Highlights

Q: Michael Lasser from UBS asked about Target's efforts to reduce business volatility and the impact of tariffs on 2025 guidance. A: Brian Cornell, CEO, emphasized the focus on consistency and reliability, with Michael Fiddelke, COO, highlighting improvements in inventory reliability and shorter lead times. Jim Lee, CFO, noted the importance of controlling what can be controlled and the ongoing journey to reduce volatility. Regarding tariffs, Rick Gomez, Chief Commercial Officer, discussed diversifying production to mitigate impacts, while Cornell stressed the focus on consumer affordability.

Q: Simeon Gutman from Morgan Stanley inquired about Target's EBIT margin target and reinvestment strategy. A: Jim Lee, CFO, mentioned continuous productivity efforts and tailwinds from digital growth and shrink improvements. Brian Cornell, CEO, highlighted significant investments in stores, supply chain, technology, and marketing to enhance capabilities and drive long-term growth.

Q: Chris Horvers from J.P. Morgan asked about the growth of Target Plus and near-term inventory pressures. A: Cara Sylvester, Chief Guest Experience Officer, explained Target Plus's growth strategy, focusing on complementing the core assortment with national brands and style breadth. Rick Gomez, Chief Commercial Officer, noted positive consumer trends around holidays and apparel, while Jim Lee, CFO, discussed incorporating tariff uncertainties into guidance.

Q: Karen Short from Melius Research questioned expected savings and their impact on guidance, as well as EPS cadence from Q2 to Q4. A: Michael Fiddelke, COO, highlighted ongoing efficiency efforts and operational improvements. Jim Lee, CFO, mentioned easier profit comparisons in the second half of the year and the timing of SG&A expenses affecting EPS cadence.

Q: Zhihan Ma from Bernstein asked about improving e-commerce profitability and differentiation of Target Circle 360. A: Michael Fiddelke, COO, discussed ongoing efforts to enhance fulfillment efficiency and reduce costs. Cara Sylvester, Chief Guest Experience Officer, emphasized Target Circle 360's differentiation through same-day delivery partnerships and consumer-focused enhancements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.