MINNEAPOLIS—Target reported that first-quarter sales were down compared to last year, as it had projected. However, the company expects sales to turn positive in the second quarter and for the year as a whole.
Comparable sales declined 3.7% in the first quarter, reflecting a comparable store sales decline of 4.8% partially offset by a comparable digital sales increase of 1.4%. Total revenue of $24.5 billion was 3.1% lower than last year, reflecting a total sales decline of 3.2% and a 3.9% increase in other revenue. First quarter operating income of $1.3 billion was 2.4% lower than last year, driven by lower sales volume.
“Our first quarter financial performance was in line with our expectations on both the top and bottom line, tracking the trajectory we outlined for this year and setting up a return to growth in the second quarter,” said Brian Cornell, chair and chief executive of Target Corporation. “Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services. Consumers continue to respond to the newness and value that we offer across our shopping experience, and we’re pleased with early results from the relaunch of Target Circle. Looking ahead, our team will deliver for our guests through lower prices, a seasonally relevant assortment, ease and convenience, as we keep investing in our strategy and efficiency initiatives to get back to growth and deliver on our longer-term financial goals.”
Target’s first quarter operating income margin rate of 5.3% reflects a 140 basis point improvement in gross margin rate as compared to the prior year, the company said. In addition to the 1.4% increase in digital comparable sales, Target reported that same-day services grew nearly 9%, led by more than 13% growth in Drive Up. Sales declines, primarily in discretionary categories, were partially offset by continued growth in Beauty.
Discretionary sales trends continued to improve vs. prior quarters, led by an improvement of nearly 4 percentage points in apparel as compared to Q4 of 2023. The company noted that it also successfully relaunched its free-to-join Target Circle loyalty program in April, and welcomed more than 1 million new members to the platform in the first quarter. And inventory at the end of the first quarter was 7% lower than last year, even as the company saw higher in-stock levels than a year ago.
For the second quarter, Target expects a 0% to a 2% increase in its comparable sales, and GAAP and Adjusted EPS of $1.95 to $2.35.
For the full year, the Company continues to expect a 0% to 2% increase in its comparable sales, and GAAP and Adjusted EPS of $8.60 to $9.60.
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