US' Target's Q1 FY25 sales dip 2.8%, digital growth eases store slump

Apparel and accessories sales declined to $3.71 billion, and home furnishings and decor dropped to $3.22 billion. Other merchandise sales also saw a modest decline. Among additional revenue streams, advertising revenue rose to $163 million, credit card profit sharing held steady at $141 million, and other income increased to $137 million.

In Q1, selling, general and administrative (SG&A) expense and operating income included $593 million in pre-tax gains from the settlement of credit card interchange fee litigation. First quarter GAAP earnings per share (EPS) was $2.27 compared with $2.03 last year and adjusted EPS was $1.30.

The comparable sales decreased 3.8 per cent in Q1, reflecting a comparable store sales decline of 5.7 per cent and comparable digital sales growth of 4.7 per cent. First quarter operating income of $1.5 billion was 13.6 per cent higher than last year. The company's limited-time collaboration with Kate Spade marked its most successful designer partnership in the past decade, Target Corporation said in a financial statement.

“In the first quarter, our team navigated a highly challenging environment and focused on delivering the outstanding assortment, experience and value guests expect from Target. While our sales fell short of our expectations, we saw several bright spots in the quarter, including healthy digital growth, led by a 36 per cent increase in same-day delivery through Target Circle 360,” said Brian Cornell, chair and chief executive officer (CEO) at Target Corporation.

For FY25, the company expects a low-single digit decline in sales, GAAP EPS of $8 to $10, and adjusted EPS of $7 to $9.

ALCHEMPro News Desk (SG)