Target’s annual revenue declined last year while sales at stores open for at least one year dropped for the first time since 2016.
America’s sixth-largest retailer predicted weak sales again this year, driven in part by higher prices.
The membership service will begin in April and cost consumers $49 for the first year for new members through May 18. After that, it will cost $99 per year, the company said.
Meanwhile, full-year total revenue of $107.4 billion decreased 1.6 percent compared with 2022, which the retailer said reflects a 1.7 percent decline in sales partially offset by a 5.1 percent increase in other revenue.
The company’s total comparable sales—those from stores and digital channels operating for at least 12 months—declined 4.4 percent in the fourth quarter, reflecting comparable store sales declines of 5.4 percent and comparable digital sales decline of 0.7 percent.
The latter still marked an improvement from the 6 percent decline in the previous quarter.
For the current quarter, Target said it expects comparable sales to drop 3 percent to 5 percent and adjusted earnings per share to range from $1.70 to $2.10.
For the full year, the retailer expects “a modest increase” in comparable sales from flat to 2 percent and adjusted earnings per share to range from $8.60 to $9.60.
Still, the Minneapolis-based retailer exceeded Wall Street’s sales expectations for the holiday season, posting a 58 percent increase in fourth-quarter profit following cost-cutting efforts and a slimmed-down inventory.
Net earnings in the quarter rose 57.8 percent to $1.38 billion, or $2.98 per share, Target said. That compared with $876 million, or $1.89 per share, for the year-ago period.
“Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” said Brian Cornell, chairman and chief executive officer of Target Corporation, referring to the three months ending Feb. 3.
“Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we'll continue to invest in the strengths and differentiators that have delivered strong financial performance over time,” Mr. Cornell continued.
Battling Boycott, Crime
Additionally, Target expects to open more than 300 stores in the United States and remodel many of its 2,000 existing ones, Mr. Cornell added.Target’s shares rose around 12 percent or $18.09, to close at $168.58 after its investors’ meeting.
The declining sales follow a turbulent year for Target, which suffered a widespread backlash in May over its LGBTQ-themed merchandise for kids. This included clothing for newborn children and books explaining how to use transgender pronouns.
After a nationwide boycott quickly arose, Target scaled back its LGBTQ+ merchandise and displays.
Meanwhile, Target has also been battling with a surge in retail crime, prompting the company to shut down nine locations in New York, San Francisco, Seattle, and Portland, Oregon.
The retailer also faces stiff competition from rivals Walmart and Costco, both of which have introduced lower prices across the board, including for groceries, as the cost of living soars.
