US' Target reaffirms FY25 outlook, names new CEO

Alongside results, the board unanimously appointed Michael Fiddelke as the company’s next CEO.

“Michael brings a deep understanding of our business and a genuine commitment to accelerating our progress,” said Brian Cornell, chair and chief executive officer (CEO) at Target Corporation.

Meanwhile, for the second quarter (Q2) of FY25, ended August 2, Target Corporation reported net sales of $25.2 billion, down 0.9 per cent year-over-year (YoY), and reflected a nearly 2 percentage point (pp) improvement compared with the first quarter (Q1).

GAAP and adjusted diluted earnings per share (EPS) were $2.05, down from $2.57 in Q2 FY24. Operating income stood at $1.3 billion, 19.4 per cent lower YoY, with the operating margin rate slipping to 5.2 per cent from 6.4 per cent. The gross margin eased to 29 per cent from 30 per cent, impacted by higher markdowns, order cancellation costs, and category mix pressure, partially offset by lower inventory shrink and stronger advertising and non-merchandise sales.

The comparable sales fell 1.9 per cent, driven by a 3.2 per cent drop in store sales, partially offset by a 4.3 per cent rise in digital comparable sales. Same-day fulfilment demand, powered by Target Circle 360 and Drive Up, jumped more than 25 per cent. Non-merchandise sales rose 14.2 per cent, led by double-digit growth in Roundel, membership, and marketplace revenues, Target Corporation said in a press release.

The selling, general and administrative (SG&A) expenses were flat YoY, at $5.36 billion, reflecting cost discipline that helped absorb store remodel investments and inflationary pressures. The SG&A expense rate rose slightly to 21.3 per cent of sales, compared with 21.1 percent in Q2 FY24.

“We reported our second quarter earnings, which showed encouraging signs of recovery, including improved traffic and sales trends—particularly in our stores—and disciplined cost management in a challenging retail environment. As we enter the critical back-to-school and holiday seasons, our team remains focused on consistent execution and building momentum as we look ahead to the new year,” added Cornell.

Meanwhile, for the six months period, net sales of the company reached $49.1 billion, down 1.9 per cent YoY. Merchandise sales fell 2.3 per cent, while non-merchandise sales grew by double digits, up 14.2 per cent. Comparable sales declined 2 per cent, as a 3.4 per cent fall in store sales.

The operating income for the six months was $2.79 billion, and the operating margin rate declined to 5.7 per cent from 5.9 per cent. Net earnings stood at $1.97 billion, a 7.6 per cent decrease from $2.13 billion. Basic EPS was $4.33 compared with $4.62 in the same period in FY24, while diluted EPS fell to $4.32 from $4.60.

ALCHEMPro News Desk (SG)