THE WHAT? Target has reported a comparable Q4 sales increase of 0.7 percent, on top of 8.9 percent in Q4 2021, driven entirely by an increase in guest traffic.
THE DETAILS Q4 operating income margin rate was 3.7 percent in 2022 compared with 6.8 percent in 2021, while Q4 gross margin rate was 22.7 percent, compared with 25.7 percent in 2021.
This is said to reflect pressure from higher clearance and promotional markdown rates, higher net merchandise costs, and higher inventory shrink, which was ‘partially offset by favorable category mix.’
Same-day services, which represent more than 10 percent of total sales, were up 4.3 percent in the quarter.
FY2022 total revenue increased US$3 billion to US$1090 billion, with comparable sales up 2.2 percent.
THE WHY? Citing a ‘challenging’ environment, Brian Cornell, Chairman and CEO, put the higher earnings down to the strength of beauty and household essentials, as well as food & beverage, offsetting ongoing ‘softness’ in discretionary categories.
However, looking ahead he warned of a challenging environment: “Looking ahead, we’re focused on executing our long-term strategy, including continued differentiation through affordability, assortment, ease and convenience. At the same time, we’re planning our business cautiously in the near term to ensure we remain agile and responsive to the current operating environment.
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