Target Corp. investors shrugged off the company’s refusal to provide guidance for the current year as its fourth-quarter performance beat expectations, sending the shares slightly higher.
Comparable-store sales rose 20.5%, which was even better than the uptick it pre-reported for the holiday period. The highlight, as in previous periods, was its digital business, which more than doubled sales in the period ended Jan. 30 thanks to same-day fulfillment services like curbside pickup and home delivery.
The cheap-chic retailer said Tuesday that it wouldn’t provide sales or earnings guidance for the current fiscal year and beyond, citing “continued uncertainty” around the pandemic. But Charlie O’Shea of Moody’s Investors Service said that the lack of guidance didn’t concern him. Target said it added $15 billion in sales last year, which is more than growth in the 11 previous years combined.
“If it ain’t broke, don’t fix it,” O’Shea said in an interview, adding that Target’s refusal to provide full-year guidance “was a strong statement, not a weak one, given how well they’ve navigated. This company has never been better positioned.”
Shares rose 0.8% to $187.50 as of 8:46 a.m. in New York.
Target’s not the only retailer to throw up its hands when it comes to predicting how 2021 will unfold: Foot Locker Inc. and Steven Madden Ltd. also declined to provide guidance for the current year. But as an industry bellwether, along with rival Walmart Inc., Target faces higher expectations from Wall Street.
Last week, Walmart disappointed investors by saying its 2021 profits would be dented by slowing sales, wage increases and supply-chain investments.
Analysts expect demand to wane as the year unfolds, with consumers shifting spending to areas like dining out and long-delayed vacations. Other pandemic-inspired changes in shopping behavior, like no-contact curbside pickup of online orders, are likely to continue.
After a gain of 19% last year, comparable sales are projected to decline 3.3% this year, according to Consensus Metrix. Target executives including Chief Executive Officer Brian Cornell will delve into the company’s performance and strategy at presentations later Tuesday morning.
“The million-dollar question is what their comparable sales look like when they go up against these Covid-inspired numbers,” Brian Yarbrough, an analyst at Edward Jones, said by phone. “Will they be flattish for the next several years because they pulled so much business forward? How many of those new customers will stay?”