MW Target's stock gains as earnings outlook doesn't disappoint, unlike rivals

By Tomi Kilgore

Profit to be pressured in Q1 due to tariff uncertainty and bad weather, but then see improvement the rest of the year

Shares of Target Corp. were gearing up for a gain in early Tuesday trading after the discount retailer bucked a recent trend of warnings by providing a full-year earnings outlook that was in line with expectations.

The company said that fiscal-first-quarter profit could see "meaningful" pressure due to tariff uncertainty and the timing of certain costs, but results should improve the rest of the year.

Target also reported fiscal-fourth-quarter profit and net sales that fell but beat expectations, while comparable sales rose in line with forecasts.

The stock $(TGT)$ climbed as much as 4.4% just after earnings were released before paring gains to be up 0.4% in recent premarket action. The stock had closed the previous session at a 16-month low.

For the full fiscal year of 2025, Target expects earnings per share in the range of $8.80 to $9.80, the midpoint of which was just above the current average EPS estimate of analysts surveyed by FactSet of $9.27.

That was a welcome surprise, as key rival Walmart Inc. $(WMT)$ had provided a profit outlook that was below expectations, as did T.J. Maxx and HomeGoods retail chain parent TJX Companies Inc. $(TJX)$

Meanwhile, the sales outlook wasn't as robust, as net sales for the year are expected to increase about 1% from the past year, and comparable sales, which includes sales of stores open for at least 13 months, are projected to be around flat.

The current FactSet consensus for net sales of $109.08 billion implies 2.4% growth, while comparable sales are modeled by analysts to rise 1.6%.

Target said it saw record sales around Valentine's Day, but the overall sales performance for February was "soft," as unseasonably cold weather across the U.S. hurt clothing sales and declining consumer confidence slowed spending on discretionary products.

Earnings per share for the quarter to Feb. 1 fell to $2.41 from $2.98, above the FactSet consensus of $2.26. Net sales declined 3.1% to $30.92 billion but topped expectations of $30.78 billion.

"Looking ahead, we expect to see a moderation in this trend as apparel sales respond to warmer weather around the country, and consumers turn to Target for upcoming seasonal moments such as the Easter holiday," said Chief Financial Officer Jim Lee. "We will continue to monitor these trends and will remain appropriately cautious with our expectations for the year ahead."

Comparable sales rose 1.5% to match the FactSet consensus.

For the fiscal fourth quarter to Feb. 1, net income fell to $1.1 billion, or $2.41 a share, from $1.4 billion, or $2.98 a share, in the same period a year ago. That topped the FactSet EPS consensus of $2.26.

Net sales slipped 3.1% to $30.92 billion, but was above analyst expectations of $30.78 billion.

"Results were led by strong performance in beauty, apparel, entertainment, sporting goods and toys," said Chief Executive Brian Cornell.

Target's stock had lost 7.2% over the past three months through Monday, while Walmart shares have gained 3.3% and the S&P 500 index SPX has declined 3.9%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 04, 2025 07:39 ET (12:39 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.