Target Q1 Misses Street, Cuts FY25 View; Sets Multi-year Acceleration Office; Stock Down- Update

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(RTTNews) - Retail major Target Corp. (TGT), while reporting higher first-quarter profit but below market, on Wednesday trimmed its outlook for fiscal 2025 adjusted earnings and sales.

Separately, the company announced the establishment of a multi-year Enterprise acceleration office, led by Chief Operating Officer Michael Fiddelke, along with several leadership changes.

In pre-market activity on the NYSE, Target shares were losing around 4.2 percent to trade at $94.00.

Brian Cornell, chair and chief executive officer of Target, said, "While our sales fell short of our expectations, we saw several bright spots in the quarter, including healthy digital growth, led by a 36 percent increase in same-day delivery through Target Circle 360, and our strongest designer collaboration in more than a decade, kate spade for Target. While these highlights reinforce our confidence in the underlying health of our business, we're not satisfied with current performance and know we have opportunities to deliver faster progress on our roadmap for growth."

For fiscal 2025, the Company now expects earnings per share of $8.00 to $10.00, and adjusted earnings per share of around $7.00 to $9.00, with a low-single digit decline in sales.

The company previously expected earnings, on a reported and adjusted basis, in the range of $8.80 to $9.80 per share on net sales growth of around 1 percent, with comparable sales growth in a range around flat.

The Wall Street analysts on average expect the company to report earnings of $8.59 per share on sales of $106.94 billion, an year-over-year projected growth of 0.35 percent. Analysts' estimates typically exclude special items.

In fiscal 2024, earnings, on a reported and adjusted basis, was $8.86 per share with sales of $106.57 billion, and comparable sales growth of 0.1 percent.

In its first quarter, Target's net earnings came in at $1.036 billion or $2.27 per share, compared with $942 million, or $2.03 per share last year.

Adjusted earnings were $1.30 per share for the period, while analysts expected the company to earn $1.65 per share.

The company's net sales for the period fell 2.8% to $23.846 billion from $24.531 billion last year, mainly reflecting a merchandise sales decrease of 3.1 percent. The Street expected sales of $24.35 billion for the quarter.

Comparable sales decreased 3.8 percent in the first quarter, reflecting a comparable store sales decline of 5.7 percent and comparable digital sales growth of 4.7 percent.

Regarding the multi-year Enterprise Acceleration Office, Target said it expects to drive even greater speed and agility across the company, positioning it to deliver faster progress on its roadmap for growth.

Fiddelke will oversee this effort to improve how functions work together to advance key priorities.

Further, under the changes across its executive leadership team, Prat Vemana, chief information and product officer, will report directly to Brian Cornell and take on leadership of the Target in India global capability center; Jim Lee, chief financial officer, will take on leadership of Target's enterprise strategy and partnerships; and Rick Gomez, chief commercial officer, will oversee Target's enterprise insights team.

Christina Hennington, chief strategy and growth officer, will depart Target and move into a strategic advisor role through September 7. Target also announced the departure of Amy Tu, chief legal and compliance officer. In the near term, Melissa Kremer, chief human resources officer, will oversee the function while the company conducts a comprehensive external search.

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