Target sets stage for continuous expansion; beats earnings estimates

Target TGT released its fiscal fourth-quarter earnings before the market opened on Tuesday, with both the top and bottom lines above analyst expectations. Target, the most recent big-box retailer to publish outstanding Q4 results, benefited from robust consumer spending on necessities such as food and household goods.

The Minneapolis-based retailer reported adjusted profits per share of $1.89, above the consensus estimate of $1.39 by a wide margin. The number represents a 35.97% earnings surprise. Revenues of $31.4 billion were up 1.3% from the previous year and above projections.

Furthermore, in a challenging climate at the end of the previous year, same-store sales climbed 0.7% compared to the predicted -1.74% loss. As a result, the actual increase in comparable same-store sales at brick-and-mortar shops was 1.9%, as opposed to the expected decrease of -2.8%.

More CAPEX ahead

This year, the business intends to invest between $4 billion and $5 billion to develop its guest-centric services, an operational network of shops and supply chain facilities, digital experiences, and other capabilities. The retailer also commented on its objectives to enhance its business efficiency initiatives, which aim to optimize its operations following years of fast expansion.

“We’re planning our business cautiously in the near term to ensure we remain agile and responsive to the current operating environment. As we plan for the year ahead, we will continue to make robust capital investments and pursue efficient opportunities supporting our long-term growth.” CEO Brian Cornell stated.

Target plans to open around 20 additional stores of various sizes in an effort to attract new customers. In addition, several new stores will have new design elements representing the local community and experiences that showcase new brands, ranges, services, and sustainable components.

Target is also investing in around 175 of its current locations, including full remodels, the inclusion of Ulta Beauty at Target or Apple at Target shop-in-shop experiences, and increased fulfillment capacity for same-day orders.

Furthermore, this year, the store intends to create or extend more than ten of its own brands, providing customers with thousands of new, distinctive items at unbeatable rates. In addition, the business will attract value-conscious customers by offering additional goods priced at $3, $5, $10, and $15.

From the technical perspective, the company trades above its 200-day moving average (the blue line). Thus, it remains in an uptrend. The next target for bulls could be at previous swing highs near $180.