Investment Rating - The report indicates a flat same-store growth guidance for Target in 2025, which is lower than market expectations [1][2]. Core Insights - Target's 2025 same-store sales growth is expected to be flat, primarily driven by customer traffic, and considers multiple downside risks including adverse weather, consumer confidence issues, and potential job losses [1][2]. - The company reported a 1.5% year-on-year increase in same-store sales for Q4 2024, slightly above market expectations [2]. - Target's online business is showing positive profit margins, with 80% of revenues coming from online sales in 2024, and the drive-up and order pickup services are leading the industry [4][14]. Summary by Sections Financial Performance - In Q4 2024, Target's gross margin was 26.2%, slightly above expectations, despite a year-on-year decline of approximately 40 basis points due to increased online order costs and supply chain expenses [2]. - The company’s EPS for Q4 2024 was $2.41, exceeding consensus estimates of $2.26 [2]. Supply Chain and Import Strategy - Target is the second-largest retail importer in the U.S., with the share of imports from China expected to decrease from 30% to 25% by the end of 2025 [3][12]. - Approximately 50% of Target's supply comes from the U.S., with 25-30% from other countries [3][12]. Product Categories and Market Strategy - The cosmetics and apparel categories are gaining market share, while the home category is expected to see marginal improvements [15][18]. - Target plans to enhance its product offerings in the home category and has seen significant growth in its cosmetics segment, which has nearly doubled since 2019 [15][18]. Inventory Management - Target's inventory increased by 7% year-on-year in Q4 2024, attributed to the introduction of new products and fluctuations in receipt timing [19]. - The company aims to optimize its supply chain to address out-of-stock situations in popular categories like toys and home goods [19].