Earnings Preview: What to expect when Target Corp. (TGT) reports Q4 2024 results

Target Corporation (NYSE: TGT) is preparing to report fourth-quarter results on March 4, with analysts forecasting a decrease in sales and adjusted earnings. The retailer has faced multiple challenges in recent months, with sales getting affected by the inflation-induced drop in discretionary spending and stiff competition. The company has been focusing more on categories like apparel and sportswear lately, as part of its efforts to grow sales and drive shareholder value.

The grocery chain’s shares are yet to recover from the sharp decline triggered by its disappointing third-quarter report a few months ago. Although TGT started 2025 on a slightly positive note, it failed to sustain that momentum as the year progressed. Last year, it underperformed the S&P 500 index quite often. The positive aspect of the price dip is that the stock has become more affordable, potentially attracting long-term investors.

Estimates

When the company reports fourth-quarter earnings on March 04, before the opening bell, Wall Street will be looking for adjusted earnings of $2.25 per share, compared to $2.98 per share in Q4 2023. Market watchers forecast a 3.4% decrease in sales to $30.85 billion in the January quarter. In a recent statement, Target’s leadership said it expects an increase of about 1.5% in fourth-quarter comparable sales, which is better than the previous forecast of flat comp sales. It continues to expect Q4 adjusted and unadjusted earnings per share to be between $1.85 and $2.45.

From Target’s Q3 2024 earnings call:

“We’re highly confident in our proven long-term strategy and in our ability to move beyond this current volatility. And importantly, we’re continuing to make the right investments in our business that will help us deliver profitable growth in the years ahead. Among the drivers of our comp sales, traffic grew a healthy 2.4% this quarter, representing well over 10 million incremental transactions compared with last year. This growth in traffic was mostly offset by a decline in average ticket as consumers continue to spend cautiously, most notably in discretionary categories.”

Mixed Results

In the third quarter, total revenue increased 1.1% from last year to $25.7 billion. Comparable sales edged up 0.3% and digitally originated comparable sales climbed 10.8%. Adjusted earnings dropped 12% annually to $1.85 per share in Q3. Net income, on a reported basis, was $854 million or $1.85 per share, down 12% year-over-year. Both revenue and earnings missed expectations. For fiscal 2024, Target now expects adjusted and unadjusted earnings in the range of $8.30 per share to 8.90 per share.

Target’s strong holiday sales indicate that the management’s growth strategy, including price cuts and merchandising initiatives, is bearing fruit. Combined sales in November and December increased 2.8%, with comparable sales and digital sales growing 2% and 9% year-over-year, respectively. Sales of discretionary items like apparel and toys grew faster than in the third quarter. Recent improvements in the economy and consumer confidence suggest that Target could deliver better performance in fiscal 2025.

On Wednesday, Target’s stock opened lower and maintained the downtrend throughout the session. It has lost a dismal 22% in the past six months.