For the full year 2022, comparable digital sales rose just 1.5%, a dramatic drop from the 20.8% rise in 2021.

Target Corp. said net earnings fell 43.3% to $876.0 million in the quarter ended Jan. 28 and warned of additional difficulties through 2023.

Total comparable sales rose 0.7% in the fourth quarter, a modest increase the mass merchant attributed to a rise in shopper visits to stores.

Comparable digital sales dropped 3.6% in the crucial Q4 holiday period. For the full year 2022, comparable digital sales rose just 1.5%, a dramatic drop from the 20.8% rise seen in 2021.


Same-day services (Order Pickup, Drive Up and Shipt) increased 4.3% in the fourth quarter. Those services account for more than 10% of Target’s total sales.


Target said 20.8% of its sales were “digitally originated” and could be attributed to its website and apps. That’s a slight decline from the 21.8% share in the year-earlier period.

In a written statement, CEO Brian Cornell said retail “continues to be a very challenging environment” as shoppers respond to rising prices and worries about a recession. 

The effects of inflation were clear in Target’s earnings report. The retailer said sales of “essentials” such as food and beauty rose in the high single digits, while sales of discretionary items such as apparel and home goods fell. The company did not disclose percentage or dollar figures for the drop.


Target ranks No. 5 in the 2022 Digital Commerce 360 Top 1000 database. The database ranks the largest North American online retailers by web sales.

Target sales forecast for rest of 2023

Target issued a less-than-optimistic forecast for 2023. The company said it expects comparable sales in a wide range, from a low single-digit decline to a low single-digit increase, for both the current quarter and the full year.

“We’re planning our business cautiously in the near term to ensure we remain agile and responsive to the current operating environment,” Cornell said.

Target’s outlook was “better than feared,” Rupesh Parikh, an analyst at Oppenheimer & Co., said in a note to clients. “We believe the elements are clearly now in place for a multiyear profit recovery,” he said.


Margins and inventory

Target’s Q4 operating income margin rate was 3.7%, well below the 6.8% of a year earlier in 2021.

Target said it expects an operating income margin rate of 4% to 5% for the current quarter, suggesting the retailer has successfully reduced much of its surplus inventory.

A decline in an operating income margin rate is generally seen as evidence of inventory discounting. Target announced in June that it would dramatically reduce inventory by slashing prices after supply-chain woes across the retail industry led to a surge in unsold goods.

Inventory at the end of the fourth quarter was 3% lower than in 2021.


Surging inventory forced discounts and reduced profit margins earlier in the year. In the fourth quarter, Target’s stockpile of discretionary merchandise — the epicenter of last year’s woes — fell about 13%. That drop, however, was partially offset by higher inventory in frequency categories.

During last year as a whole, Target said it gained market share in all five of its merchandise categories.

Target said it expects its operating income margin rate will reach, and begin to move beyond, its pre-pandemic rate of 6%, as early as the fiscal year that ends in early 2025, “depending on the speed of recovery for the economy and consumer demand.”



Q4 2022 Target earnings

For the three months ending Jan. 28, 2022, Target reported:

  • Revenue from sales of $30.98 billion, a 1.2% rise from the $30.62 billion in sales a year earlier.
  • A 5.2% rise in the cost of sales to $23.95 billion from $22.76 billion in the comparable quarter of 2021.
  • Net earnings of $876 million, a 43.3% drop from the $1.54 billion reported in Q4 2021.

For the year ending Jan. 28, 2022, Target reported:

  • Revenue from sales of $107.59 billion, a rise of 2.8% from the $106.61 billion in the prior year.
  • A 9.7% rise in the cost of sales to $82.23 billion from $74.96 billion in 2021.
  • Net earnings of $2.78 billion, a 60.0% drop from $6.95 billion in the prior year.

Percentage changes may not align exactly with dollar figures due to rounding.

Bloomberg News contributed to this report.

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