Earnings Preview: Target (TGT.US) projects another decline in Q4 same-store sales, with hopes that slowing inflation will boost performance in 2024.

Tajiet (TGT.US) will announce its fourth-quarter 2023 performance before the US stock market opens on Tuesday. Wall Street analysts currently expect Tajiet's Q4 revenue to increase by 1.5% year-on-year to $31.879 billion, and earnings per share to increase by 25.9% year-on-year to $2.38. However, Wall Street analysts also predict that Tajiet's Q4 same-store sales will decline by 4.6%, marking the third consecutive quarter of decline. The market expects that with inflation slowing down, consumers will be more motivated to purchase non-essential items, which may boost Tajiet's sales and profits in 2024. Wall Street analysts predict that Tajiet's sales in 2024 will increase by approximately 1%. Facing competition from retailers such as Temu and Shein, Tajiet is taking measures to attract consumers who like to buy low-priced goods. In January of this year, Tajiet launched a low-cost in-house brand called "Dealworthy", with most products priced below $10, covering clothing, accessories, beauty products, electronics, and home products. Jane Hali & Associates analyst pointed out that Tajiet is also focusing on products that can stimulate frequent purchases by consumers, such as beauty products and food and beverages. Charles Sizemore, Chief Investment Officer of Sizemore Capital Management, said, "I'm more interested in consumer behavior or whether it has changed than specific sales or profit numbers." "With discretionary spending shrinking for two consecutive years and inflation significantly slowing down, discretionary spending is expected to rebound." He added that Tajiet's stock price has been rising and has increased by 38% since the announcement of third-quarter results on November 15 last year. In addition, with the decline in China-US West Coast freight rates and the stabilization of theft issues at Tajiet stores, analysts and investors expect the company executives at Tajiet to outline some measures to help the company achieve its 2024 earnings before interest and taxes (EBIT) margin target of 6%. Citigroup analyst Paul Lejuez said that the long-term EBIT profit potential announced by Tajiet will be a "key driver" for the stock. However, he added that interruptions in red sea shipping leading to delayed arrivals of goods and rising container costs could potentially inhibit margin improvements. For comparison, Walmart (WMT.US), Tajiet's competitor, announced last month that its fourth-quarter 2024 gross margin was 23.3%, an increase of 39 basis points from the same period last year. This was partially due to around 33% growth in its global advertising business (with Walmart Connect advertising sales in the US region growing by 22%), attributed to spending by packaged food and consumer goods companies promoting their brands to Walmart customers. Therefore, analysts are also interested in whether Tajiet's retail media subsidiary Roundel has achieved similar growth.