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Target Announces A Paid Membership Tier And Expects Sales To Rebound In 2024

Target Announces A Paid Membership Tier And Expects Sales To Rebound In 2024
Target's shares increased 12% after the company posted better holiday-quarter earnings on a smaller-than-expected sales fall and forecast that annual comparable sales would come in considerably above Wall Street estimates.
To increase sales at its outlets, the mass merchandiser is counting on same-day services, new product launches, and a new membership programme.
Target CEO Brian Cornell announced during an earnings call that the company will be introducing a membership programme called Target Circle 360 next month, which will provide customers with unlimited same-day delivery.
In comparison to $1.89 per share during the same period last year, Target recorded adjusted earnings of $2.98 per share in the fourth quarter. LSEG projections show that analysts expected $2.42 per share on average.
Compared to the 4.6% loss analysts had predicted, total comparable sales from November to January decreased by 4.4%. This decrease was partially attributable to a rebound in sales on Compared to the 6% decrease in the prior quarter, online sales decreased by 0.7% in the fourth quarter.
The business stated that heavy spending on Black Friday and Cyber Monday contributed to holiday-quarter sales, with customers favouring recently-released lines including its private-label Figmint cookware brand and Kendra Scott jewellery.
Additionally, consumers reacted favourably to same-day pickup services like Drive-up, which accounted for over 10% of overall sales during the quarter, according to the business.
In the upcoming ten years, Target plans to renovate the majority of its 2,000 current shops and open over 300 new ones in the United States, said the CEO.
"(The) biggest takeaway is now back-to-back strong quarters, which is exactly what the market wants to see out of Target - consistency, which is an adjective that has been elusive for the company over the past 2-3 years," said Dave Wagner, portfolio manager at Aptus Capital Advisors.
Starting on April 7, Target Circle 360 will be available to customers for a five-week period for a special membership price of $49, enabling same-day delivery for orders over $35. The minimum order requirement was comparable to that of Walmart's Walmart Plus initiative.
Cornell continued, "Target's focus on launching new products and services and the new loyalty programme will help reignite sales, traffic, and market share gains in 2024."
"Dealworthy" is a new line of 400 products that Target has already launched, with prices starting under $1. The products range from electronics to clothing to cosmetics.
"We spent most of last year, watching consumers shift their consumption patterns towards services versus goods. That consumption pattern seems to be normalizing back to a healthy balance of both goods and services this year," said Art Hogan, chief market strategist at B Riley Wealth.
Target announced that its adjusted earnings per share for 2024 would range from $8.60 to $9.60. LSEG data shows that the midpoint of that range was about in line with analysts' predictions of $9.14 per share.
In contrast to analysts' average projections of an increase of 0.86%, annual comparable sales this year are predicted to be between flat and up 2%.
A year earlier, gross margins were 22.7%; but, in the fourth quarter that concluded on February 3, they increased to 25.6% due to lesser markdowns, strong inventories, and decreased freight and supply-chain costs.

Christopher J. Mitchell

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