Target Corp. announced that revenue grew while comparable sales declined in its fiscal fourth quarter ended Feb. 3, 2024. Meanwhile, revenue and comparable sales both declined over the full 2023 fiscal year.

Those results exceeded Target’s expectations, the retailer said in a March 5 press release. “Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” CEO Brian Cornell said in a written statement.

“Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we’ll continue to invest in the strengths and differentiators that have delivered strong financial performance over time,” he continued.

Target is No. 5 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s online retailers by web sales. Digital Commerce 360 categorizes Target as a mass merchant.

How much does Target make in online sales?

Fourth-quarter revenue grew 1.7% to $31.92 billion, from $31.39 billion in the year-ago period. That was driven by a 1.6% growth in sales and a 9.8% increase in other revenue, Target said.

Total comparable sales declined 4.4% over the same period. Comparable store sales declined 5.4%, while online sales fared relatively better, down 0.7%. Online sales were boosted by strong same-day services including in-store pickup, Drive Up, and Shipt, Target said. They made up more than 10% of total sales and grew 13.6% in the quarter. Drive Up sales led the growth, it said. Online sales made up 21.3% of total sales, a slight increase from 20.8% in Q4 2022. 

Although online sales declined year over year, they improved over the third quarter, Target said. In Q3, online comparable sales had declined 6% year over year.

Operating income grew most significantly in the quarter. It increased 60.9% to $1.87 billion.

Meanwhile, full fiscal 2023 revenue declined 1.6% from 2022 levels to $107.41 billion. Total comparable sales declined 3.7% in the period, and digital comparable sales decreased 4.8%. Online sales accounted for 18.3% of total sales for the year, down from 18.6% in 2022. 

For the full year, operating income grew 48.3% to $5.71 billion.

Target launches a paid membership

The retailer announced its new paid membership program, Target Circle 360. 

“We’ll also roll out fresh innovations, including our new Target Circle membership program, as part of our roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024 and beyond,” Cornell said.

Target Circle 360 will launch on April 7 at a discounted rate of $49 per year through May 18, when the price will increase to $99. Membership offers unlimited same-day delivery for orders of $35 or more. Delivery can take as little as an hour, Target said. Members will also receive free two-day shipping on Target.com orders. The retailer said members will also get access to other perks like partnerships in the future. Its Target Red Card will be rebranded as the Target Circle Card, with 5% off purchases.

Target Circle will continue on as the free tier of the membership program. 

The new membership offering puts Target further in direct competition with Amazon and Walmart, which each offer similar programs. 

“It is understandable why Target wants to have a paid loyalty scheme; however, as currently conceived, the program does not seem all that compelling,” said Neil Saunders, managing director at retail analysis firm Global Data. “It will probably appeal to those who use Target extensively and get a lot of deliveries, but beyond that, it doesn’t stack up very well against rivals like Walmart and particularly Amazon.”

Saunders framed the announcement as a starting point for Target — and one that will need to evolve.

“To be fair, Target has to start somewhere, and it will probably add more benefits over time, but it really needs to deepen the value consumers get at a time when most households have subscription fatigue,” Saunders added. “The more positive aspect of the program is that it will allow Target to deepen its efforts in the retail media space.” 

Target holiday results

Target’s Black Friday and Cyber Monday sales “outperformed overall trends,” the retailer said of the peak shopping days. An affordable assortment of toys and holiday meals were main draws for consumers, the retailer said without sharing more.

Target earnings

For the fiscal fourth quarter ended Feb. 3, 2024, Target Corp. reported:

• Total revenue grew 1.7% to $31.92 billion, from $31.39 billion in the year-ago period.
• Total comparable sales declined 4.4%, and digital comparable sales declined 0.7%.
• Target online sales accounted for 21.3% of total sales.

For the 12 months ended Feb. 3, 2024, Target reported:

• Total revenue declined 1.6% from 2022 levels to $107.41 billion.
• Total comparable sales declined 3.7% in the period, and digital comparable sales decreased 4.8%. 
• Target online sales made up 18.3% of sales.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update on Target.

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