Target Q4 sales rise 9.4% as earnings beat Street; gives upbeat guidance

Target Corp. reported fourth-quarter earnings that easily topped analysts’ estimates amid its 19th straight quarter of comp increases and said its total sales have increased more than $27 billion since 2019.

In other news, the company said is plans to invest up to $5 billion in its physical stores, digital experiences, fulfillment capabilities and supply chain capacity in 2022 to keep driving growth. The investments include approximately 30 new stores and 200 top-to-bottom renovations of its existing fleet. The company is also expanding its sortation center format, opening five more facilities to open by spring and another five later this year. The centers streamline the process of fulfilling digital orders from stores.

[Read More: Target to open 30 stores, execute 200 full store remodels in 2022]

The discounter posted net income of $1.54 billion, or $3.21 a share, for the quarter, up from $1.38 billion, or $2.73 a share, in the year-ago period. Adjusted earnings per share were $3.19, well in front of the $2.84 analysts expected.

Revenue rose 9.4% to $30.996 billion, missing estimates of $31.307. Comparable sales grew 8.9%. Comparable traffic rose 8.1%. The company said more than 95% of its fourth-quarter sales were fulfilled by its stores.

Target said it had higher supply chain costs in the fourth quarter, including higher freight and merchandise costs. Its labor costs were also up and are expected to continue to rise. On Monday, the retailer said that it is increasing its starting wage from $15 to $25 for hourly employees in its stores, supply chain facilities and headquarter locations, with the exact starting wage based on the role and local market. It’s also expanding its medical benefits to more employees.

“Our strong fourth-quarter performance capped off a year of record growth in 2021, reinforcing the durability of our business model and our confidence in long-term profitable growth,” said Brian Cornell, chairman and CEO of Target. “As we look ahead, we’ll keep investing and delivering on all that has earned the loyalty and trust of our guests; that starts with our outstanding team and includes continued differentiation through affordability, assortment, ease and convenience.”

Target’s full-year revenue increased 13.3% to $106.0 billion. Full-year sales increased 13.2% to $104.6 billion. The retailer said that its five core merchandise categories all delivered double-digit comparable sales growth in 2021.

The company said its total sales have increased more than $27 billion since 2019, reflecting more than $14 billion of additional store sales and digital sales growth of nearly $13 billion.

Target's “Drive Up” curbside service saw sales grow more than 70% in 2021. The company is set to test several enhancements to the service, including an option to make product returns.

Target opened 32 new stores and four supply chain facilities, including two sortation centers, in 2021. 

For 2022, the company is expecting revenue to grow in the low to mid-single digits, with adjusted earnings per share up by a high single-digit amount. It plans to spend $4 billion to $5 billion on capital expenditures.