Target Corp (NYSE:TGT) stock fell 1.60% (As on March 5, 11:33:37 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY24 driven by a stellar performance in beauty, apparel, entertainment, sporting goods and toys. However, the Minneapolis-based retailer issued a cautious first-quarter fiscal 2025 view. Target anticipates significant year-over-year profit pressure in the first quarter compared to the rest of the year owing to ongoing consumer uncertainty, a slight decline in February net sales, tariff concerns and the expected timing of certain expenses throughout the fiscal year. The company achieved record sales during Valentine’s Day in February, but overall monthly performance was subdued. Unseasonably cold weather across the United States impacted apparel sales, while weakening consumer confidence led to softer demand for discretionary items. The company ended the quarter with cash and cash equivalents of $4,762 million, long-term debt and other borrowings of $14,304 million and shareholders’ investment of $14,666 million.

Moreover, the gross margin contracted 40 basis points to 26.2%. This can be attributed to higher digital fulfillment and supply-chain costs as well as higher promotional and clearance markdown rates. These were partly mitigated by the net benefit of other merchandising activities. The operating margin shrunk to 4.7% from 5.8% in the corresponding period last year.

TGT in the fourth quarter of FY24 has reported the adjusted earnings per share of $2.41, beating the analysts’ estimates for the adjusted earnings per share of $2.25, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue decline of 3.1 percent to $30.92 billion in the fourth quarter of FY24, beating the analysts’ estimates for revenue of $30.77 billion. The merchandise sales declined 3.3% to $30,428 million. Meanwhile, comparable sales rose 1.5% in the fourth quarter, following a 0.3% increase in the preceding quarter. The metric reflected a decline of 0.5% in comparable store sales but an increase of 8.7% in comparable digital sales. While traffic improved by 2.1%, the average transaction amount declined by 0.6%. Target highlighted that comparable sales trends in apparel and hardlines increased by nearly four percentage points compared with the third quarter.

Target expects net sales growth to be around 1%, driven by flat comparable sales. The company also anticipates a slight improvement in its operating margin rate compared to full-year 2024, with GAAP and adjusted earnings per share projected between $8.80 and $9.80.