Key Takeaways
- Target will report first-quarter earnings before the bell Wednesday.
- Analysts expect the retailer to post a decline in revenue and earnings from the year-ago period amid a pullback in discretionary spending by inflation-weary consumers.
- In a bid to stimulate demand, Target announced plans Monday to lower the price of an estimated 5,000 “frequently shopped” items over the course of the summer.
- Wednesday’s report is also the first since Target announced the revamping of its Target Circle membership program with the addition of a paid tier that could help it compete with Amazon Prime and Walmart+.
Target (TGT) will report first-quarter earnings before the bell Wednesday, in its first earnings report since announcing the revamping of its Target Circle membership with the addition of a paid tier that could help Target compete with peers.
Like some other retailers that reported earnings this week such as Lowe’s (LOW), Target is expected to post a decline in revenue and earnings from the year-ago period amid a pullback in discretionary spending by inflation-weary consumers.
Analysts project Target will report net income of $930.34 million or $2 per share on $24.53 billion in revenue, compared to the net income of $950 million or $2.05 per share on $25.32 billion in revenue that Target reported in the first quarter of 2023, according to estimates compiled by Visible Alpha.
| Analyst Estimates for Q1 2024 | Q4 2023 | Q1 2023 | |
| Revenue | $24.53 billion | $31.92 billion | $25.32 billion |
| Diluted EPS | $2 | $2.98 | $2.05 |
| Net Income | $930.34 million | $1.38 billion | $950 million |
Key Metrics: Costs, Comparable Store Sales
Target has said in recent quarters that improving its cost management has helped to offset decreases in comparable store sales as consumers have pulled back on discretionary spending to deal with persistently high inflation.
Target isn’t the only retailer that’s said inflation is causing consumers to be more value-conscious, with Walmart (WMT) executives saying in last week’s earnings call that the company was seeing its share of high-income consumers who make over $100,000 annually increase as inflation has “stretched” many consumers’ budgets.
In a bid to stimulate demand, Target announced a plan Monday to lower prices on some 5,000 of its “frequently shopped” items over the course of the summer, which the company said could save its customers “millions” as they prepare to celebrate summer holidays like Memorial Day and the Fourth of July.
Business Spotlight: Revamped Target Circle
In March, Target announced plans to expand its Target Circle program to add a paid membership tier for benefits like free same-day deliveries and an extended return period, in a move that could help it compete with other retail giants with subscription plans like Amazon (AMZN) with Prime and Walmart with Walmart+.
After Target Circle 360 launched in April, investors may be watching whether company leadership will provide updates on the subscription’s success so far, as well as long-term goals for the service.
The e-commerce delivery market is getting more competitive, with Target’s revamped Target Circle debuting in the quarter, along with a grocery delivery subscription service for Prime members that Amazon announced last month.
Target shares have gained over 9% so far in 2024, at $155.59 as of 3 p.m. ET Tuesday.