U.S. retail giant Target (TGT) has reported better-than-expected fourth quarter earnings but warned of a slowdown in consumer spending as it issued muted forward guidance.
The Minneapolis-based discount retailer said its holiday quarter sales rose 1% in 2022 from the same period a year earlier.
However, the company warned that it expects comparable sales will range from a low single-digit loss to a low single-digit increase for all of this year as consumers spend less on discretionary items due to persistently high inflation.
Target said it expects full-year 2023 earnings per share of between $7.75 U.S. to $8.75 U.S. That was below Wall Street’s expectations of $9.23 U.S. per share, according to Refinitiv data.
In terms of its Q4 numbers, Target reported earnings per share (EPS) of $1.89 U.S. versus $1.40 U.S. that was expected by analysts who cover the company. Revenue for the quarter came in at $31.4 billion U.S. compared to $30.72 billion U.S. that was forecast.
It was Target’s first earnings beat on both the top and bottom lines in a year. The company has faced a shift in both sales trends and market sentiment coming out of the COVID-19 pandemic.
The retailer has also struggled with excess inventory, squeezed profit margins, and concerns about inflation’s impact on middle-income consumers.
Target’s net income for Q4 2022 fell by 43% to $876 million U.S., or $1.89 U.S. per share, from $1.54 billion U.S., or $3.21 U.S. a share in the year earlier period.
Customer traffic, which includes both online and in-store purchases, grew by a slight 0.7% in the fourth quarter.
Target’s stock has declined 17% over the past 12 months to trade at $166.81 U.S. per share.