Target Sees Modest Q4 Sales Growth

Growth in several key categories helped the retailer overcome a challenging retail environment.
Greg Sleter
Associate Publisher/Executive Editor
Greg Sleter profile picture
Target 2023 New Store Format

Fourth quarter sales at Target, which includes the 2022 holiday season, were up slightly with the retailer reporting strength in key categories such as food and beverage, beauty and household essentials.

For the quarter ended Jan. 28, total revenue was $31.4 billion, an increase of 1.3% when compared to the same quarter the previous year. The modest increase was driven by sales growth of 1.2% and an 8.4% increase in other revenue. Operating income in the quarter was $1.2 billion, down 44.7% from $2.1 billion in 2021.

The company's total comparable sales grew 0.7% in the fourth quarter, reflecting comparable stores sales growth of 1.9% and a comparable digital sales decline of 3.6%.

"We're pleased that our business delivered comparable sales growth in the fourth quarter, in what continues to be a very challenging environment,” said Brian Cornell, chairman and chief executive officer of Target Corporation. “This performance highlights the benefit of our multi-category merchandise assortment, which drives relevance with our guests in any environment, and is a key reason we grew traffic every quarter last year.”

Full-year sales increased 2.8% to $107.6 billion from $104.6 billion last year, reflecting a 2.2% increase in comparable sales combined with sales from non-mature stores. Full-year total revenue of $109.1 billion grew 2.9% compared with 2021, reflecting sales growth of 2.8% and a 9.8% increase in other revenue.

Full-year operating income of $3.8 billion in 2022 was down 57% from $8.9 billion last year. Full-year gross margin rate was 23.6%, compared with 28.3% in 2021, reflecting pressure from higher clearance and promotional markdown rates, higher net merchandise and freight costs, higher supply chain costs reflecting increased compensation and headcount in the company's distribution centers, and higher inventory shrink.

Looking ahead, Cornell said the company is focused on executing its long-term strategy, including continued differentiation through affordability, assortment, ease and convenience. At the same time, Target is planning its business cautiously in the near term to remain agile and responsive to the current operating environment. 

“We're pleased that we entered the year in a very healthy inventory position, reflecting our conservative approach in discretionary categories and our commitment to reliability in our frequency businesses,” Cornell said. “As we plan for the year ahead, we will continue to make robust capital investments and pursue efficiency opportunities in support of our long-term growth.”

For first quarter 2023, Target expects comparable sales in a wide range, from a low-single digit decline to a low-single digit increase, and an operating income margin rate of 4% to 5%. For the full year, the company expects comparable sales in a wide range from a low-single digit decline to a low-single digit increase.  Operating income is expected to grow more than $1 billion.