Target Q1 2025 Earnings: Shares Drop Amid Inflation and Disappointing Guidance, Prices Set to Shift
Target's Q1 2025 earnings reveal a 3% revenue decline year-over-year as inflation pressures curb discretionary spending. Despite a slight earnings beat, the retailer’s cautious profit outlook and new membership strategy signal challenges ahead in the competitive retail landscape.
Highlights From Target's Q1 2024 Performance
- Target shares declined in premarket trading after reporting first-quarter revenue of $24.53 billion, aligning with estimates but down 3% compared to last year.
- Although earnings slightly exceeded expectations at $942 million ($2.03 per share), the company’s guidance for Q2 and full-year profits fell short of analyst forecasts.
- The retailer revamped its Target Circle membership, introducing a paid tier to rival Amazon Prime and Walmart+, aiming to boost customer loyalty and engagement.
Target Inc. (TGT) faced a dip in share price during premarket hours following its Q1 2024 financial results. The report highlighted ongoing inflationary pressures and reduced discretionary consumer spending impacting sales figures.
The reported revenue of $24.53 billion met analysts’ projections but reflected a 3% decline from $25.32 billion in Q1 2023. Net income slightly decreased to $942 million, or $2.03 per diluted share, marginally surpassing expectations of $930.3 million and $2.00 per share.
Management acknowledged persistent impacts from cautious consumer spending habits yet noted gradual improvements in discretionary sales compared to prior quarters.
In-store sales fell 4.8% year-over-year, while Target’s digital channels showed resilience, with curbside pickup sales growing 13% compared to last year.
Looking ahead, Target forecasts comparable store sales growth between flat and 2% for Q2 and the full fiscal year. Second-quarter EPS is projected between $1.95 and $2.35, with the midpoint below the consensus estimate of $2.19. Full-year EPS guidance ranges from $8.60 to $9.60, also slightly under analyst expectations of $9.37.
Target Circle Relaunch and Competitive Pricing Strategy
In April 2024, Target relaunched its Target Circle membership program, adding a paid subscription tier that offers perks such as free same-day delivery. This move aims to strengthen its competitive stance against Amazon and Walmart.
The company reported adding one million new members in Q1 but did not specify how many joined the free versus the paid Target Circle 360 tier.
Additionally, Target announced plans to reduce prices on approximately 5,000 top-selling products this summer to better compete with lower-cost retailers.
Despite these initiatives, Target’s shares fell 8% prior to market open on Wednesday. However, the stock remains up 9% year-to-date, closing at $155.78 on Tuesday.
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