Target raised its holiday-quarter comparable sales forecast on Thursday, buoyed by robust shopper demand for clothing, toys and beauty products during November and December, but profit margin concerns sent its shares down nearly 3%.
Target
The Minneapolis-based chain on Thursday said sales on Black Friday and Cyber Monday hit records, prompting it to raise its comparable sales growth forecast for the three months through January to 1.5% from prior expectations of flat growth. But the retailer maintained its fourth quarter and full-year adjusted earnings per share (EPS) forecast in the range of $1.85 to $2.45 and $8.30 to $8.90, respectively, suggesting discounts were key to driving sales performance.
Target’s shares were down 2.6% in morning trading. Including today’s losses, its stock is down 7% over the past year, as analysts said investors might want more clarity on reaffirmed profit forecasts.
“Despite the better same-store sales performance, the EPS guide was reiterated, likely due to margin implications,” Jefferies analysts wrote in an note.
The brokerage said Target’s early inventory buildup in the previous quarter, meant to avoid East Coast port strike disruptions, may have continued to weigh on profits during its holiday quarter.
It estimated the costs for preparing for the three-day strike in October reduced the retailer’s profit margins by nearly 1 percentage point.
Still, Target’s sales performance is in contrast to rival Macy’s, which issued a more downbeat outlook for the holiday quarter.
It also surpassed initial estimates from data and research firms that had predicted a slightly weaker Black Friday and Cyber Monday for Target compared to rivals Walmart, PDD’s Temu and Shein.
Earlier this week, apparel retailers, including Lululemon, Abercrombie & Fitch and American Eagle, also raised their holiday-quarter sales expectations as discounts at stores and online drew in more customers.
Target’s comparable sales rose 2% during November and December, Target said, driven by a nearly 3% rise in shopper visits to its website and 1,963 U.S. stores. The retailer saw a “meaningful” increase in the purchases of non-essential items such as apparel and toys, a change from the previous quarter where apparel sales were weak as unusually warm weather reduced demand for winter clothing.
As a result, Target had issued a much weaker-than-expected sales forecast for the holiday quarter, causing its shares to drop.
Since then it boosted advertising on streaming platforms like Peacock and Hulu after Black Friday and on Cyber Monday. It also increased promotions to attract cash-strapped customers and cut prices across a wide assortment.
Some of the promotions included up to 40% off on sweatshirts, sweatpants, fleece and denim products, while it also increased its toy collections priced under $20. “It was a better-than-expected report and it gives us some optimism as you head into the year,” Telsey Advisory Group analyst Joseph Feldman said.
Analysts and investors have noted that during the holiday season retailers who were able to offer differentiated or trendy merchandise saw a boost in sales. Target benefited from its exclusive merchandise partnership with pop star Taylor Swift, its spokesperson said, with shoppers queuing up to buy her Eras Tour book and vinyl albums on Black Friday.
The company on Thursday also announced executive leadership changes, including the elevation of senior vice president, store operations, Adrienne Costanzo as chief stores officer and Prat Vemana’s transition to chief information officer and product officer from chief digital and product officer.
Costanzo and Vemana replace Mark Schindele and Brett Craig, respectively, who are retiring. The company also promoted Sarah Travis, head of its retail media business, to executive vice president and chief digital and revenue officer.
Burberry announced a key appointment on Friday with the luxury business saying it will soon have a new chief information officer.
Charlotte Baldwin
It has appointed Charlotte Baldwin to the role and she’ll join the business at the end of March. Baldwin will be responsible for leading Burberry’s global technology team and will join the executive committee. She’ll report directly to Burberry CEO Joshua Schulman.
He described her as “a highly experienced technology and digital leader with a track record of leading large-scale digital transformation”.
She hasn’t previously worked in the luxury fashion sector but has wide-ranging experience across some major-name businesses in Britain.
She’s currently the global chief digital and information officer at coffee chain Costa Coffee where she oversees the company’s technology, digital and data organisation.
Prior to joining that firm, she was the chief information, digital and transformation officer at private healthcare giant Bupa’s Bupa Insurance unit. She’s also held senior roles at Freshfields Bruckhaus Deringer, Pearson and Thomson Reuters.
Burberry has been navigating a tough period of late and Schulman joined in the top job last year, tweaking the firm’s strategy. His approach seems to be paying off with the company last week porting improved results, although the turnaround is still undeniable a work in progress.
Another day, another shopping centre delivering a “record-breaking” performance in 2024. This time it’s Gloucester Quays “capping off another year of considerable growth”, for the owner/operator Peel Retail & Leisure.
That included record Christmas trading at the key Gloucester mall, which helped overall sales for the year finish 6.7% ahead of the national average. Across November and December, retail sales grew 3.6% compared with 2023.
Looking at 2024 in total, an overall 7.4% year-on-year sales increase across its tenants was split between 6.1% for retail, and 8.5% for F&B.
But there was also double-digit growth from leading fashion, homewares, and outerwear brands including Next, Skechers, All Saints, Mountain Warehouse, Puma, Crew Clothing and Suit Direct.
It said sustained growth was seen across all categories “points to the increasing relevance of the Gloucester Quays experience”.
Paul Carter, asset director at Peel Retail & Leisure, added: “There have been various headlines this month about how challenged retail was around Christmas, so to have Gloucester Quays performing so well is a real credit to our team and our brands.
“These results also serve as a reminder of how relevant and in demand this outlet is. We have experienced consistent growth for several years, and that success can be put down to the quality of our offer and waterside environment. There is no doubt our catchment is responding to how we have evolved Gloucester Quays, as an urban outlet that combines a compelling shopping environment with dining and leisure to fit all tastes and needs, benefitting from a heritage waterside setting that few regionally can match.”
Italy’s Give Back Beauty, which makes perfumes for luxury brands such as Chopard and Zegna, on Friday said it had agreed to buy domestic rival AB Parfums to grow its distribution operations and add licensing deals.
Corrado Brondi, founder and president of Give Back Beauty
Fragrances have been outperforming the broader beauty sector and Give Back Beauty founder and Chairman Corrado Brondi told Reuters his company did not rule a possible bourse listing in the future, adding it had no financial need for it at present.
Brondi said AB Parfumes had sales of around €100 million, which would add to Give Back Beauty’s net revenues that totalled around €300 million in 2024.
Give Back Beauty, which was founded in 2019 and has a distribution deal with Dolce & Gabbana and a beauty license with Tommy Hilfiger, has a core profit margin currently a little over 15%, it said.
AB Parfums is being sold by Italy’s Angelini Industries, a family-owned group that is mostly active in the pharmaceutical sector.
Give Back Beauty’s business is currently focused on fragrances, which represent roughly 70% of its revenues, but it aims to grow its skincare, make-up and haircare product lines, Brondi said.
Entertainment8 years ago