Target (TGT): A few notable points on the Q4 performance and plans for 2025 and beyond

Shares of Target Corporation (NYSE: TGT) were down over 1% on Wednesday. The stock has dropped 11% over the past three months. The retailer delivered better-than-expected earnings results for the fourth quarter of 2024 and has forecasted sales growth for fiscal year 2025. It also outlined several growth plans for the upcoming year and beyond. Here are a few notable points on the quarterly performance and future plans:

Q4 performance

Target’s net sales decreased 3% to $30.9 billion in the fourth quarter of 2024 compared to the year-ago quarter, which had an additional week. Adjusted earnings per share fell 19% year-over-year to $2.41. Comparable sales for the quarter grew 1.5%, helped by strong traffic and digital sales growth. Traffic was up by over 2% in Q4 while digital comparable sales grew nearly 9%. During the quarter, the company saw a pickup in discretionary categories such as apparel and hardlines.

2025 outlook

Target’s top line performance thus far in the first quarter of 2025 has been volatile. Despite record sales on Valentine’s Day, overall sales in February remained soft as cold weather affected apparel sales and a decline in consumer confidence impacted discretionary sales.

Looking ahead, the company anticipates a moderation in this trend as apparel sales respond to warmer weather, and it prepares to cater to customers with a wide seasonal assortment for Easter. These top line trends, coupled with tariff uncertainty and the timing of certain costs, are expected to put pressure on profits in Q1.

For fiscal year 2025, Target has forecasted net sales growth of around 1% with flat comparable sales. GAAP and adjusted EPS are expected to range between $8.80-9.80.

Growth plans

As mentioned on its quarterly call, Target sees a vast addressable retail market. The company makes up less than 3% of a $4.2 trillion market, which provides it with significant opportunity for market share expansion.

A key part of Target’s strategy to grow its market share involves expanding its store base. The company plans to add 300 stores over 10 years. It opened 23 new stores in 2024 and has plans to open 20 more stores in 2025. In addition, it plans to remodel several of its stores across the country.

Target continues to expand its assortment to help customers discover new and trendy products. These efforts have helped drive a 20% uptick in traffic since 2019. The company is focusing on this discovery experience to help drive its market share growth.

Another area of growth is the company’s online marketplace Target Plus. Target Plus currently generates over $1 billion in gross merchandise volume, growing over 35% and representing around 10% of external search volume in the past year alone. The retailer expects Target Plus to deliver upwards of $5 billion in annual GMV within the next five years.

In addition to these areas, Target is working on its delivery services, its loyalty program and driving growth across its essential and discretionary categories. The company aims to drive over $15 billion in revenue growth over the next five years.