Target's Stock Gains Post Q4 EPS Beat; Top-Line Misses Consensus

Target Corp TGT reported fourth-quarter FY21 sales growth of 9.4% year-on-year, to $30.99 billion, missing the consensus of $31.41 billion.
Comparable sales grew 8.9% versus 20.5% growth last year. Comparable stores sales increased 8.9%, and digital sales rose 9.2%.
Adjusted EPS of $3.19 beat the consensus of $2.86.
The gross margin for the quarter contracted 110 basis points Y/Y to 25.7% due to pressure from increased supply chain costs.
The operating margin expanded 30 basis points to 6.8%, while operating income for the quarter rose 14.1% Y/Y to $2.1 billion.
EBITDA increased 13.7% Y/Y to $2.8 billion.
The company had 1,926 stores as of January 29, 2022, versus 1,897 stores last year.
Target held $5.9 billion in cash and equivalents as of January 29, 2022. As of Q4 end, the company had $12.3 billion remaining capacity under the repurchase program approved in August 2021.
Outlook: Target sees FY22 revenue growth of low to mid-single-digit and an operating margin rate of 8% or higher.
The company expects high-single-digit growth in FY22 adjusted EPS.
The company expects the Q1 FY22 operating margin rate to be favorable in relation to historical performance but well below its Q1 FY21 rate of 9.8%.
Target has also updated its long-term financial algorithm, with mid-single-digit growth in total revenue.
Price Action: TGT shares are trading higher by 10.9% at $221.50 in premarket on the last check Tuesday.

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