May 17, 2023


Target reported its first quarter results this morning, producing flat comps, slight net sales growth, digital declines, and better than expected profitability.


Management expects comps to decline in the low-single digit range in 2Q as a result of progressive softening from February through April, although maintained its full year outlook of flat comps and $1B in operating income improvement.


Management could not be any clearer around their focus on winning with the combination of newness and affordability, while also highlighting their positive expectations around key seasonal moments in 2H (Back to School/College, Halloween, Thanksgiving and Christmas).


Management indicated they continue to find efficiency gains in their digital operations through the expansion of sort centers, better route optimization, process improvements for loading Shipt vehicles, and expanding the size of Shipt vehicles. The team continues to highlight the faster than average growth of same-day services (+mid-single digits) compared to overall growth (down Y/Y).


eCommerce has yet to rebound for Target, with sales down 3.4% Y/Y (vs. down 3.6% last quarter) and digital penetration down 70 basis points compared to a year ago. They appear to still be rolling out the ability to return items curbside, and hence, this was not a material factor during 1Q. It’s unclear what will catalyze this segment in ‘23.


Read on for a summary of Target’s results and thoughts on implications for brands.

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