Executive Summary
In Q1 2024, Target Corporation reported revenues of $24.53 billion, down 3.4% year-over-year (YoY), attributing this decline primarily to softness in home and hardlines categories. Operating income was $1.30 billion, yielding a 5.3% operating margin, while net income reached $942 million, translating to an earnings per share (EPS) of $2.03. Despite challenging market conditions, management remains optimistic, indicating strong foundational growth driven by investments in technology, store expansion, and a revamped loyalty program—Target Circle. Management anticipates a return to revenue growth in Q2 2024, supported by significant price reductions and a focus on value-driven offerings.
Key Performance Indicators
Key Insights
1. **Revenue**: $24.53 billion (YoY change: -3.4%)
2. **Gross Profit**: $6.46 billion, Gross Margin: 26.3%
3. **Operating Income**: $1.30 billion (Operating Margin: 5.3%)
4. **Net Income**: $942 million
5. **EPS**: $2.03 (YoY change: -2.9%)
6. **Cash Flow from Operations**: $1.10 billion
7. **Free Cash Flow**: $427 million
8. **Current Ratio**: 0.86
9. **Debt to Equity Ratio**: 1.16
10. **Inventory Turnover**: 1.54...
Financial Highlights
1. Revenue: $24.53 billion (YoY change: -3.4%)
2. Gross Profit: $6.46 billion, Gross Margin: 26.3%
3. Operating Income: $1.30 billion (Operating Margin: 5.3%)
4. Net Income: $942 million
5. EPS: $2.03 (YoY change: -2.9%)
6. Cash Flow from Operations: $1.10 billion
7. Free Cash Flow: $427 million
8. Current Ratio: 0.86
9. Debt to Equity Ratio: 1.16
10. Inventory Turnover: 1.54
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
24.53B |
-3.41% |
0.00% |
| Gross Profit |
6.46B |
-10.83% |
0.00% |
| Operating Income |
1.30B |
-1.59% |
0.00% |
| Net Income |
942.00M |
-2.99% |
0.00% |
| EPS |
2.04 |
-2.86% |
0.00% |
Key Financial Ratios
operatingProfitMargin
5.28%
operatingCashFlowPerShare
$2.38
freeCashFlowPerShare
$0.92
dividendPayoutRatio
53.9%
Management Commentary
- Brian Cornell (CEO) noted, "We're firmly on track to deliver our guidance for 2024, with Q1 comp sales above the midpoint of our expectations and EPS near the upper end."
- Christina Hennington (Chief Growth Officer) commented on consumer trends: "Despite inflationary pressures, we're seeing resilience, especially in discretionary categories like apparel, where Q1 performance improved by approximately 4 percentage points from Q4."
- On price strategies, Cornell stated, "We've announced price cuts on 1,500 frequently shopped items, aimed at helping our guests stretch their budgets during this challenging time."
"We are continuing to focus on delivering unbeatable value to our guests... We've made price cuts on 1,500 frequently shopped items in many markets."
— Brian Cornell
"While we won't be satisfied until we return to growth, we're encouraged by the meaningful progress we've seen in recent quarters."
— Michael Fiddelke
Forward Guidance
Management forecasts a modest recovery in Q2 2024, expecting comparable sales growth in the range of 0% to 2%. EPS guidance for Q2 is set between $1.95 and $2.35—reflecting an optimistic view bolstered by initiatives focused on customer value and enhanced efficiency across operations. Continued investments in supply chain improvements and the rollout of new technologies are seen as critical to achieving these targets. Investors should monitor the effectiveness of pricing strategies and consumer response to promotional campaigns, especially within the newly revitalized Target Circle loyalty program.