Target set for sales rebound in 2024, despite holiday blues
Business
Target set for sales rebound in 2024, despite holiday blues
NEW YORK (Reuters) - Mass-merchandise retailer Target (TGT.N), opens new tab is expected to post a drop in holiday quarter same-store sales, its third consecutive quarterly drop, when it reports results on Tuesday.
But investors say the chain, which sells everything from $5 cami tops and $25 shorts to $100 coffee machines, may be able to boost sales and profits in 2024 as inflation moderates, giving shoppers more incentive to buy non-essential products.
The Minneapolis-based firm is expected to report a 4.6% drop in comparable sales for the holiday quarter and a 3.6% decline for the year, according to LSEG estimates.
Looking ahead, its 2024 sales are expected to rise by about 1%, according to LSEG. Commerce Department data on Wednesday showed that inflation is gradually cooling.
Facing competition from PDD Group's (PDD.O), opens new tab cross-border e-commerce site Temu, and Shein, a China-based direct-to-consumer retailer that has been gaining market share in the U.S., Target is taking steps to reach bargain-minded shoppers.
In January, Target introduced "dealworthy", a new line of 400 products, stretching from apparel and accessories to beauty, electronics and home products, at prices starting at $1.99.
The retailer, which operates nearly 2,000 stores, has also focused on stocking products that could incentivize shoppers to return for frequent purchases, such as beauty and food & beverage products, according to Jane Hali & Associates analysts.
"I'll be far more interested to see how or if consumer behavior is changing (than any specific sales or profit number)," said Charles Sizemore, chief investment officer of Sizemore Capital Management, which holds about half a million dollars in Target shares.
"After a two-year drought in discretionary spending -- and a noticeable slowdown in inflation -- spending on discretionary items should be in a good position for a rebound," Sizemore said. Target shares have been on an upswing, rising 38% since it reported its third-quarter results on Nov. 15.
In 2023, Target executives faced a right-wing backlash over its Pride merchandise and over inventory losses that Target said were caused by "organized retail crime." The chain had its first quarterly decline in store visits since before the pandemic during the second quarter of last year.
