Omnichannel

Target chief cites ‘softness’ regarding Q1 results

Adobe Stock

May 18, 2023

Target sales grew 0.5% due to what company leaders call "continued softness" in discretionary product categories but were happy with store traffic growth of 0.9% in the brand's first quarter of 2023.

The traffic growth follows on the heels of 3.9% growth in Q1 a year ago, according to a press release on the quarterly results. Digital comparable sales dropped 3.4% from a year ago.

"We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we've established with our guests. It's required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now. Thanks to the team's dedication, we saw an increase in guest traffic in Q1, with total sales increasing and profitability ahead of expectations," Brian Cornell, chair and CEO of Target Corp., said in the release.

"As we look ahead, we now expect shrink will reduce this year's profitability by more than $500 million compared with last year. While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue. We are making significant investments in strategies to prevent this from happening in our stores and protect our guests and our team. We're also focused on managing the financial impact on our business so we can continue to keep our stores open, knowing they create local jobs and offer convenient access to essentials."

Total revenue of $25.3 billion grew 0.6% compared with last year. Operating income of $1.3 billion in first quarter 2023 was down 1.4% from last year.