Target Corp. reported that both revenue and comparable sales declined in the first quarter of fiscal 2024 ended May 4. However, online sales did increase slightly. Declines in discretionary categories were partially offset by continuing growth in the beauty category.

Results were in line with expectations, the retailer said.

“Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services,” CEO Brian Cornell said in a written statement on May 22.

Target is No. 5 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s online retailers by web sales. Digital Commerce 360 categorizes Target as a mass merchant.

How much did Target make in online sales in Q1?

Target Q1 total revenue declined 3.1% to $24.5 billion. Comparable sales declined 3.7%, due to a 4.8% decline in same-store comparable sales and a 1.4% increase in digital sales.

Q1 marked the first increase in ecommerce in over a year, the retailer said. Online sales were once again boosted by same-day services, including in-store pickup, Drive Up, and Shipt, Target said. Drive Up grew the most, increasing 13% year over year to account for more than $2 billion in Q1. 18.3% of Target Q1 sales originated online, compared to 17.5% in the year-ago period, Target said.

Target Circle Week sales promotion in April was a success, Cornell said. It drove the highest web and app traffic of the past year, excluding the Q4 holiday season. 

Online sales will likely continue to be a source of growth for Target, Cornell said. “In fact, we view digital as more than just a sales channel,” he added. “It’s also the connective tissue across most of our transactions. Around half of guests that open the Target app on a given day make in-store purchases with us that same day.”

Operating income declined because of lower sales, Target said. It decreased 2.4% to $1.3 billion.

Discretionary spending remained a Q1 challenge

Target’s results remained pressured on discretionary items in Q1, the retailer said. However, trends improved compared to previous quarters. Apparel sales grew 4% compared to Q4 2023, Target said. Meanwhile, hardline and home goods continue to be the most impacted. 

In response, Target is trying to appeal to consumers by lowering prices on 5,000 home and grocery items, it announced a few days before reporting Q1 earnings. The retailer already lowered prices on 1,500 products, with the rest to take effect in the coming months. The price changes will be on everyday items that consumers frequently buy, Target said.

“These cuts are focused on everyday items in our food and essential categories and are designed to help our guests make the most of their budgets,” Cornell said.

Target Circle relaunch

Target also relaunched its free membership program, Target Circle, in April. It added a new paid tier: Target Circle 360.

The free level of the program has more than 100 million members, Cornell said. One million of those joined in Q1. 

Paid membership offers unlimited same-day delivery for orders of $35 or more. Delivery can take as little as an hour, Target said. Circle 360 membership also includes same-day delivery from other retailers through Target’s Shipt fulfillment service. Shipt has relationships with dozens of retailers, like Big Lots (No. 237 in the Top 1000), Carter’s (No. 81), and Kroger (No. 6).

Members will also receive free two-day shipping on Target.com orders. 

The Target Red Card was rebranded as the Target Circle Card, with 5% off purchases.

Circle members can link accounts with other services to get exclusive perks, Target said. Target customers can earn Ulta reward points through Ulta Beauty purchases at Target. Members can also access free trials of Apple TV, Apple Fitness+ and other Apple services.

So far, the new Target Circle is popular among customers. “Our guests tell us they find the program easier to use, appreciate the clarity of the promotions offered, and understand the value provided with their membership,” chief growth officer Christina Hennington said in a May 22 call.

“Social sentiment is up compared to a year ago, and mentions of Target Circle on social platforms increased by more than 500% versus last year, boosted by our immensely popular marketing campaign featuring Saturday Night Live alum Kristen Wiig revisiting her role as the Target lady,” she added.

Target earnings

For the fiscal first quarter ended May 4, 2024, Target Corp. reported:

• Total revenue declined 3.1% to $24.53 billion, from $25.32 billion in the year-ago period.
• Total comparable sales declined 3.7%, and digital comparable sales grew 1.4%.
• Target online sales accounted for 18.3% of total sales.

Read last quarter’s Target earnings results here.

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