Target (TGT 0.18%) is scheduled to report fiscal 2022 first-quarter earnings on May 18. The retailer has thrived since the pandemic's onset, buoyed in part by its strong omnichannel offering.
Consumer shopping behavior has evolved considerably in the last couple of years. Target is one of the businesses that has adjusted well to meet customers where they want to shop -- whether online, in person, or both.
When Target reports Q1 figures on May 18, investors will look for the momentum to continue.
Image source: Getty Images.
Digital sales have fueled Target's growth
In its most recent quarter, which ended on Dec. 31, comparable store sales increased by 8.9%. That was on top of a 20.5% increase from the same quarter in the prior year when folks were more cautious about shopping in person. The boost in sales helped Target deliver earnings per share of $3.21, which was the highest in the company's long history.
TGT EPS Diluted (TTM) data by YCharts
Looking out over the entire year in 2021, Target generated $108 billion in sales. Over the previous two years, buoyed by the pandemic, Target has grown revenue by $28 billion or 35%. Brian Cornell, chairman and CEO of Target, said:
Our strong fourth-quarter performance capped off a year of record growth in 2021, reinforcing the durability of our business model and our confidence in long-term profitable growth. As we look ahead, we'll keep investing and delivering on all that has earned the loyalty and trust of our guests; that starts with our outstanding team and includes continued differentiation through affordability, assortment, ease and convenience.
Interestingly, $13 billion of the $28 billion increase in Target's revenue was driven by digital sales over the last two years. Consumers have particularly liked Target's same-day services, including the options to buy online and pick up in-store, buy online and have the item delivered to your car in a Target parking lot, or buy online and have the order delivered to your home within hours.
TGT Revenue (Annual) data by YCharts
Revenue derived through these same-day services grew by 235% in 2020 and 45% in 2021. More than ever, consumers are looking for options for getting their online orders. Waiting two or more days to receive your online orders by mail is not as enticing as it used to be.
What this could mean for Target investors
Analysts on Wall Street expect Target to report revenue of $24.37 billion and earnings per share (EPS) of $3.04. If the company meets those projections, it will represent an increase of less than 1% and a decrease of 17.6%, respectively, from the same period the year before.
Moreover, the figures would contrast with management's forecast for 2022, which calls for revenue growth of low to mid-single digits and earnings-per-share growth of high single digits. Target's stock is down 5% for the year on a broader market sell-off. If management tells investors that customers are enthusiastically shopping at Target and raises targets for the rest of 2022, that could be the catalyst that lifts the stock higher.
