Target (NYSE:TGT) offered a conservative sales forecast for its current financial year, citing uncertainty around trade policy and consumer spending trends. The announcement caused shares to drop more than 6% intra-day today.
The company now expects comparable sales growth to hover around flat, falling short of consensus projections for a 1.7% increase. February’s sales saw a slight decline, raising concerns about near-term revenue momentum.
Target also flagged profit headwinds for the first quarter, citing last month’s sales dip, trade policy uncertainty, and the timing of specific cost pressures. The company anticipates a “meaningful” year-on-year decline in first-quarter profitability, with performance expected to improve later in the year.
Despite these concerns, Target reported a stronger-than-expected fourth quarter, with comparable sales rising 1.5%, surpassing the anticipated 1.18% gain. Growth was driven by strong demand for apparel, toys, and sporting goods during the key holiday season, reversing a 4.4% decline from the prior year.
Additionally, core quarterly profit before interest, taxes, depreciation, and amortization reached $2.26 billion for the three months ending February 1, exceeding analyst forecasts of $2.14 billion.
Looking ahead, Target expects sales trends to improve as warmer weather boosts apparel sales and key shopping periods, such as Easter, drive increased consumer spending. However, ongoing macroeconomic and trade policy uncertainties remain key variables for the retailer’s performance in the coming months.