Target Corp. announced that sales for its fiscal third quarter ended Oct. 28, 2023 decreased year over year. Similarly, Target online sales declined in the period. CEO Brian Cornell said in an earnings call with investors that the decline was in line with expectations.

“Overall consumers are still spending,” Cornell said. “But pressures like higher interest rates, the resumption of student loan repayments, increased credit card debt and reduced savings rates have left them with less discretionary income, forcing them to make trade-offs in their family budgets.”

He gave an example of consumers increasingly delaying spending until the last moment. Guests who previously bought sweatshirts or denim in August or September are waiting until the weather is cold enough to warrant wearing them before making a purchase, he said.

The beauty category led Target’s performance in the quarter, said Christina Hennington, chief growth officer, in the earnings call. Through its Ulta Beauty partnership, Target added Fenty Beauty products to its lineup. The brand, which musician Rihanna founded, “has quickly become one of our top-selling beauty brands across the chain,” Hennington said.

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.

How much does Target make in online sales?

Third-quarter sales declined 4.9% for the mass merchant, to $25 billion from $26.12 billion in the year-ago period. Meanwhile, Target online sales decreased 6% year over year. Moreover, Target online sales declined 6.7% year over year for the first nine months.

Continued Drive-Up and overall same-day delivery growth is helping Target improve profitability while revenue trends down, said James Risley, research data manager and senior analyst at Digital Commerce 360.

“Target’s focus on fulfillment from stores allows it to fulfill more than 80% of online orders come from store inventory,” Risley said. “If shoppers are driving to the store to pick up those orders, they don’t need as much packaging and they cut out delivery costs. For Target to continue to grow profits, its ability to meld those offline and online sales channels will be vital, but it’s not something many other retailers can copy to build profits, as it relies on a huge store base and the ability to build a massive tech backend to support it.”

Loyalty program and planning for the holiday season

Cornell said Target is hiring 100,000 seasonal team members to supplement its existing team this holiday season.

Hennington said the retailer added 500,000 members to its loyalty program, Target Circle, through its promotional period in early October, Target Circle Week. She said the “recently refreshed” Target website and app help create a stronger customer experience. Target Circle members will receive exclusive offers during the retailer’s Black Friday promotional period, Hennington said.

For Thanksgiving specifically, Hennington said, Target is offering a meal “that includes all the family favorites for under $25.” That features turkeys for 99 cents per pound, she said, and side for $5.

On Target.com and the Target app, Hennington said, “guests can immerse themselves in a digital 360-degree room filled with the hottest toys for kids of all ages to try before they buy.”

Target earnings

For the fiscal third quarter ended Oct. 28, 2023, Target Corp. reported:

• Total sales declined 4.9%. Meanwhile, total revenue was $25.4 billion, down 4.2% year over year from $26.52 billion.
• Target online sales declined 6% year over year. They accounted for 16.8% of total sales, which is down slightly from 17.1% in the year-ago period.

For the nine months ended Oct. 28, 2023, Target reported:

• Total sales declined 3.5%. Total revenue decreased 2.9% year over year, to $75.49 billion from $77.73 billion.
• Target online sales declined 6.7% year over year. They accounted for 17.1% of total sales, which is down from 17.7% in the comparable period of 2022.

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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