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Target Misses on Q1 Earnings Estimates, Slashes FY25 Outlook
TargetTarget(US:TGT) ZACKSยท2025-05-21 15:30

Core Insights - Target Corporation (TGT) reported first-quarter fiscal 2025 results, missing both top and bottom line estimates, leading to a reduction in full-year guidance due to ongoing consumer demand challenges and operational pressures [1][7] Financial Performance - Adjusted earnings were $1.30 per share, below the Zacks Consensus Estimate of $1.62 and down from $2.03 in the same period last year [3] - Total revenues reached $23,846 million, falling short of the Zacks Consensus Estimate of $24,228 million and declining 2.8% year-over-year [3] - Merchandise sales decreased by 3.1% to $23,405 million [3] Sales Metrics - Comparable sales dropped by 3.8%, following a 1.5% increase in the previous quarter, with comparable store sales down 5.7% and comparable digital sales up 4.7% [4] - Traffic decreased by 2.4%, while the average transaction amount fell by 1.4% [4] Margin Analysis - Gross margin contracted by 60 basis points to 28.2% due to increased markdowns and rising costs associated with digital fulfillment and supply chain operations [5] - Adjusted operating margin decreased to 3.7% from 5.3% in the same period last year [5] Financial Health - Cash and cash equivalents stood at $2,887 million, with long-term debt at $14,334 million and shareholders' investment at $14,947 million [6] - During the quarter, TGT paid out $510 million in dividends and repurchased 2.2 million shares worth $251 million [6] Future Outlook - TGT now anticipates a low-single-digit decline in sales, revised from a previous forecast of 1% growth, and adjusted earnings are expected to be between $7.00 and $9.00 per share, down from $8.80 to $9.80 [7] - GAAP earnings per share are guided between $8.00 and $10.00 [7] - Year-to-date, Target's shares have decreased by 27.4%, contrasting with a 9% growth in the industry [7]