Target and Best Buy Q4 Profits Decline, EPS Beats Estimates

Retail giants Target and Best Buy reported Q4 net profits declining, but earnings per share and quarterly revenues exceeded analyst estimates. Investors should monitor potential impacts on stock prices due to these results.

Date: 04-03-2025

AI Rating: 6

Target Corp. Analysis: Target reported a net profit decline to $1.10 billion ($2.41 per share) compared to $1.38 billion ($2.98) in the prior year. Although the earnings per share of $2.41 exceeded analyst expectations of $2.25, the decrease in net sales by 3.1% to $30.92 billion, though above the estimated $30.83 billion, raises concerns.

The report highlights a total comparable sales increase of 1.5% driven by growth in digital sales (up 8.7%). Yet, a lower gross margin of 26.2% attributed to higher costs poses risks ahead. With a forecast of earnings in the range of $8.80 to $9.80 per share for fiscal 2025, Target’s guidance remains cautiously optimistic, though potential profit pressure looms for Q1 due to external economic factors.

Best Buy Co., Inc. Analysis: Best Buy's net earnings plummeted to $117 million ($0.54 per share), down from $460 million ($2.12) previously. Although the adjusted earnings of $2.58 per share surpassed the expected $2.41, the sharp decline highlights challenges faced by the company. Revenue decreased to $13.95 billion versus $14.65 billion last year but exceeded estimates of $13.70 billion. Comparable sales grew 0.5%, a rebound from the prior year's declines.

Looking forward, Best Buy projects adjusted earnings between $6.20 to $6.60 per share, with guidance slightly above current analyst expectations, indicating a mixed outlook. Additionally, the plans for $300 million in share repurchases and a dividend increase may reflect efforts to bolster investor confidence.

Stocks: TGT BBY