Target's online sales cooled last year, with a pessimistic outlook for 2023

It is learned that on February 28, Target released its financial results for the fourth quarter and full year of 2022. Data showed that its online sales performance in the fourth quarter and full year of 2022 was not ideal, with a decrease of 3.6% in the fourth quarter and only a 1.5% increase for the full year, a significant decrease compared with the 20.8% increase in 2021.

Target's operating margin was 3.7% in the fiscal fourth quarter ended Jan. 28, down from 6.8% in the same period of 2021, and net income fell 43.3% to $876 million. The company warned that growth in 2023 could be more difficult as shoppers react to higher prices and fears of a recession.

In the fourth quarter, Target's overall sales grew 0.7%, which it attributed to increased offline sales. Same-day delivery services (order pickup, carry-on and shipping) grew 4.3% in the fourth quarter, and these services account for more than 10% of Target's total sales.

According to DigitalCommerce360's North American Top 1000 Retailer data, Target is the fifth largest retailer in North America by online sales. Target said that 20.8% of its sales came from its online business, including websites and apps. This is a slight decrease from the 21.8% share in the same period last year.

Target's earnings report also reflected the impact of inflation, with the retailer saying sales of "essentials" such as food and beauty grew in the high single digits, while sales of discretionary items such as apparel and home goods fell, but the specific figures were not disclosed.

Target released a less optimistic performance forecast for 2023, predicting comparable sales for the first quarter and full year of 2023 will decline from low single digits to low single digit growth.

Target expects operating margins of 4% to 5% in the first quarter of fiscal 2023 as it has successfully reduced much of its excess inventory. As of the fourth quarter, Target's inventory was down 3% from 2021.

For all of last year, Target said it gained market share in all five of its major merchandise categories. Target said it expects its operating margin to reach and begin exceeding pre-pandemic levels of 6% as early as the fiscal year ending in early 2025, but that ultimately depends on the pace of economic recovery and customer demand.

2022 Fourth Quarter and Full Year Results Highlights

For its fiscal fourth quarter ending January 28, 2023, Target reported:

• Sales revenue was $30.98 billion, up 1.2% from $30.62 billion in the same period last year.

• Cost of sales increased 5.2% to $23.95 billion from $22.76 billion in the same period of 2021.

• Net income was $876 million, down 43.3% from the $1.54 billion reported in the fourth quarter of 2021.

For fiscal year 2022, ending January 28, 2023, Target reports:

• Sales revenue was US$107.59 billion, up 2.8% from US$106.61 billion in the previous year.

• Cost of sales increased 9.7% to $82.23 billion from $74.96 billion in 2021.

• Net profit was US$2.78 billion, down 60.0% from US$6.95 billion in the previous year.

Editor✎ Ashley/

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