Target Releases Upbeat Revenue Outlook For 2022 After Strong Holiday Season
NEW YORK (AP) — Target pushed through headwinds — from inflation to congested ports — to deliver solid results for the three-month period that included the crucial holiday shopping season.
Fourth-quarter profit rose nearly 12%, sales increased 9.4% and the Minneapolis retailer on Tuesday released an upbeat revenue outlook for 2022.
Retailers are facing rising costs for everything from labor to shipping as supply chain backups hit companies worldwide. Target, because of its size, was able to charter vessels and fill its shelves ahead of the holiday shipping crunch.
Yet Target was not unscathed and cost pressures from 2021 are carrying over into this year.
Gross margins fell from 26.8% during the fourth quarter of 2020, to 25.7% in the most recent quarter. And Target said Tuesday that margins in the first quarter will be lower last year.
That did not phase investor who drove shares up more than 12% before the opening bell.
Target's advantage competing against massive rivals can be found in its 1,900 stores, which have become become the equivalent to Amazon's "fulfilment centers." Aisles have been filling with shoppers again as the pandemic wanes and behind the scenes, online orders are taken, goods are packed and shipped or prepared for curbside pickup at Target stores that are critical to satisfying digital sales, which rose 9.2% in the quarter.
Digital sales growth reached nearly $13 billion in 2021 and more than 95% of Target's fourth-quarter sales were fulfilled at its stores.
"We're getting more efficient, more productive — and that's flowing through to the bottom line," CEO Brian Cornell said on CNBC.
Net income for the quarter that ended Jan. 29 reached $1.54 billion, or $3.21 per share. Adjusted earnings per share for the latest quarter was $3.19, easily topping the $2.85 that industry analysts were looking for, according to FactSet. It also topped last year's fourth-quarter profit of $1.38 billion, or $2.73 per share.
Revenue was $31 billion compared with Wall Street projections of $31.32 billion.
The company registered an 8.9% increase in sales at stores opened at least a year.
Target expects low- to mid-single digit revenue growth for the current fiscal year.
That comes as the retailer Target aims to recruit and hold on its workers with higher pay. The company announced Monday that it will adopt minimum wages that range from $15 to $24 an hour, with the highest pay going to hires in the most competitive markets. It currently pays a universal starting wage of $15 an hour.
The company is also expanding its partnerships with various brands. Last year, it began rolling out Ulta Beauty shops in its stores as part of a deal with the beauty retailer. It plans to eventually have shops in 800 of its stores.
Target has roughly 350,000 employees in the U.S.
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