Target Sees Upswing in Comp Sales in Q4; Shares Fall on Spending Plans
Same-store sales in Target’s Q4 ended Feb. 3 grew 3.6 percent over the 2016 quarter, with 1.8 percentage points comp improvements from stores and e-commerce, the company reported Tuesday. That compares with a 3.3 percent drop in same-store sales in…
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Q4 2016 and an increase of 1.8 percent for e-commerce. Revenue in Q4 2017 rose 10 percent to $22.8 billion, reflecting the additional shopping week in the 2017 holiday season. The retailer had growth across all five core categories, said CEO Brian Cornell on an investor webcast. Store traffic rose 3.2 percent, which Cornell said reflected “healthy increases” in stores and digital channels. Target plans to spend more than $7 billion over the next two years on "reimagining" stores and "modernizing every part of the business," he said. E-commerce sales were up 29 percent vs. 34 percent in Q4 2016, the company said. Stores generated 91.8 percent of revenue in Q4 vs. 8.2 percent for digital channels. Segment earnings before interest expense and income taxes were $1.2 billion in Q4, down 14.3 percent, and EBIT margin rate was 5.1 percent, compared with 6.5 percent. The Q4 gross margin rate slipped from 26.6 percent to 26.2 percent, reflecting “pressure from digital fulfillment costs,” it said. Selling, general and administrative expenses grew a percentage point to 18.5 percent, driven by higher compensation costs. Target announced Tuesday it will raise minimum hourly wages to $12 per hour this spring, after an increase to $11 last fall, as part of a plan to reach $15 by 2020. Shares closed 4.5 percent lower Tuesday at $71.79.