Target will report earnings ahead of Wednesday’s call, shedding light on consumer spending as prices rise on inflation and pre-pandemic spending such as commuting, restaurants and summer vacations.
Here’s what Wall Street expects in the first fiscal quarter, according to the Refinitiv Consensus Outlook:
- Earnings per share: $3.07 expected
- Revenue: $24.49 billion expected
So far this week, retailers have been sending mixed signals about consumer sentiment. Home Depot raised its full-year forecast and performed well in the first quarter as homeowners switched to premium products and hired project specialists. Walmart missed out on profits as shoppers spent more on food and less on higher-margin discretionary purchases — with some opting for cheaper brands or smaller quantities like half a gallon of milk.
Target says it can keep demand going even as the war in Ukraine and inflation create uncertainty and consumers leave their homes. At the March Investor Day, the company shared its full-year outlook. The company said it expects revenue growth from low to mid single digits and adjusted earnings per share to rise to high single digits.
Compared to Walmart, Target’s revenue comes from a larger range of products. In fiscal 2021, about 20% of Target’s annual sales came from food and beverages, according to the company’s annual report. Beauty and homewares generated 26% of annual revenue, while other major categories such as apparel and accessories contributed roughly 20% each. Walmart US, on the other hand, gets a little over half of its annual revenue from groceries.
Target has partnered with popular brands to open Apple, Disney and Ulta Beauty mini-stores in their stores. The company has also launched its own fashion but budget brands. This has helped the retailer win new customers during the pandemic, including middle- and high-income households who can continue to spend money even as food and gas prices rise.
As of Tuesday’s close, Target shares are down about 7% this year. Shares closed at $215.28 on Tuesday, down 1.41%. Target has a market value of $99.82 billion.