Target’s decision to cut prices to boost sales has paid off.
The retailer’s holiday-quarter sales at stores open at least a year rose nearly 1% compared to the same period in 2021. That came in well above analysts’ expectations: Wall Street had expected sales to slip.
Consumers spent more of their money on food, beauty and other household essentials at Target, which helped “offset ongoing softness in discretionary categories,” the company said in an earnings release.
CEO Brian Cornell said the retailer is “pleased that our business delivered comparable sales growth in the fourth quarter, in what continues to be a very challenging environment.”
Case in point: Target now expects its 2023 sales to be less than analysts’ expected, ranging from a “low-single digit decline to a low-single digit increase.”
Excess inventory, previously a problem for Target because inflation-weary customers pulled back on spending on nonessential items, also appeared to be easing. Cornell said it has “entered the year in a very healthy inventory position, reflecting our conservative approach in discretionary categories and our commitment to reliability in our frequency businesses.”
Another bright spot is Target’s growing portfolio of in-house brands, growing at a faster pace than its overall sales. Partnerships, including a holiday-themed one with UK retailer Marks and Spencer, were also a hit with shoppers, it said.
Shares of Target
(TGT) rose more than 5% in premarket trading.