American retail corporation Target aims to achieve sales worth $15 billion by 2030. The company also plans to add 20 new stores this year besides investing $4-5 billion towards physical store expansions, enhancing online delivery, and streamlining supply chain.
Released during its annual investor meeting, Target’s Q4, FY25 results indicate a dip in sales and profits during the crucial holiday season. Executives attribute this to cautious consumer spending and warn of ‘meaningful pressure’ on profits due to tariffs imposed on goods from Mexico, Canada, and China. Brian Cornell, CEO cautions, consumers might witness a rise in prices ofc certain products. .
Despite these challenges, Target exceeded most quarterly earnings estimates. However, the company's sales declined in February due to severe weather and waning consumer confidence. Target anticipates flat sales for the year due to economic uncertainty.
Tariffs and trade tensions, particularly with China, are significantly impacting Target's operations. The company is accelerating efforts to diversify its sourcing, reducing its reliance on China from 60 per cent in 2017 to a projected 25 per cent by the end of next year. It is also shifting sourcing to countries like Guatemala and Honduras and exploring domestic options.
Target is also strategically adjusting its pricing to mitigate the impact of rising costs. The company focuses on maintaining affordability for essential items while adjusting prices on products with greater flexibility. This approach helps balance profitability with consumer affordability.
Exceeding Wall Street expectations, Target reported a net income of $1.1 billion in FY24. For the current year, the company forecasts earnings per share of $8.80 to $9.80. It remains cautiously optimistic, despite the economic challenges, expecting net sales to increase by 1 per cent this year.
