MINNEAPOLIS — As fears of a looming recession weigh on American shoppers, discretionary spending remains soft, said A. Christina Hennington, executive vice president and chief growth officer at Target Corp. Still, the Minneapolis-based retailer saw food and beverage sales grow high-single digits in the recent quarter, reflecting “broad-based strength across the category,” while sales of apparel and other hardline merchandise decelerated, she noted.
Net earnings for the first quarter ended April 29 were $950 million, equal to $2.06 per share on the common stock, down 5.8% from $1.01 billion, or $2.17 per share, in the prior-year period.
Total revenue increased 0.6% to $25.32 billion from $25.17 billion. Comparable traffic grew 0.9% in the quarter, even as “consumers were becoming more cautious in their overall shopping behavior,” said Brian C. Cornell, chair and chief executive officer of Target Corp., during a May 17 earnings call.
“Profitability for the quarter was ahead of expectations,” Mr. Cornell said. “We came into the year clear-eyed about what consumers are facing with persistent inflation and rising interest rates. And we were determined to build on the trust our guests have had in Target by unifying as a team to deliver affordable joy each and every day as consumers and businesses navigate a third straight year of dynamic challenges.”
This summer, Target is planning to launch seasonal food and beverage offerings, including more than 100 new items under the Good & Gather private label, which it launched four years ago.
Mr. Cornell noted the evolution of Target’s food and beverage business.
“When I arrived at Target just under nine years ago, our food and beverage category was underperforming and losing market share,” he said. “But rather than turning away from that part of our business, we decided to lean in. We committed to the long term and engaged in the hard work that we needed to improve our performance, ranging from our relationship with vendors to our fresh food supply chain, store labor model, assortment strategy and our own brands.“Much of that work happened behind the scenes, and it took time before business trends in food and beverage started to change, but the work paid off over time. We entered 2023 following three straight years of unprecedented growth and market share gains in food and beverage, having grown that category by more than 61% between Q1 2019 and this year's first quarter.”