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Margins remain front-and-center for investors this earnings
season, with big retailers spending heavily to expedite
shipments and hire thousands more people to navigate global
supply chain bottlenecks and ensure well-stocked shelves.
Giving its fourth quarter figures, Minneapolis-based Target said
it expects pressure on profit margins to ease later this year,
as sales are boosted from new online shopping options and
same-day delivery services.
Target said its same-day businesses, such as Shipt, order pickup
and drive-up - allowing shoppers to pull into a store and pick
up goods in minutes or get them delivered within hours - rose
45% in 2021.
New tie-ups with companies including Starbucks on curbside
pickup shopping options is expected to bolster sales this year.
"Partnerships like Starbucks provide more reasons to be at
Target and could potentially add to customer traffic and more
frequent purchases," said Jessica Ramirez, retail analyst at
Jane Hali & Associates.
BEATING LOGJAMS
For fiscal 2022, Target expects low- to mid-single digit revenue
growth, compared with analysts' estimate of a 2.18% rise.
It forecast adjusted profit to rise in the high single-digit
range, while analysts had predicted a marginal rise.
In preparation for the bumper Christmas and New Year period,
Target and other major retailers, including Amazon.com and
Walmart, had brought forward promotions and hired their own
vessels to manage shipping logjams and other disruptions.
On an adjusted basis, Target earned a profit of $3.19 per share
in the fourth quarter, beating estimates of $2.86.
Still, it predicted first-quarter operating margins to be well
below 2021 levels.
Total revenue rose 9.4% to $30.62 billion in the fourth quarter
ended Jan. 29. Comparable sales rose 8.9%, but missed analysts'
expectations of a 10.23% increase, according to IBES Refinitiv
data.
(Reporting by Aishwarya Venugopal and Uday Sampath in Bengaluru;
Editing by Sriraj Kalluvila and Andrew Cawthorne)
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