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Investing.com – Target (NYSE:TGT) stock surged 13% in premarket trading Tuesday as the retailer guided for a year of positive growth after capping 2021 with a 13% rise in sales.
The optimistic outlook follows a year when most retailers struggled with high supply chain costs, fatter wage bills and shortages.
The company closed the year with $106 billion in sales and said 2022 revenue should grow “low- to mid-single digit” with an operating margin rate of 8%, just 0.4 percentage point lower year-on-year.
Adjusted profit per share in the quarter rose over 19% to an all-time high of $3.19, according to the company.
Fourth-quarter sales were up 9.4% at $31 billion as the pandemic-fueled consumer propensity to stock up remained strong. Holiday sales, coming in the backdrop of an almost two-year-long pandemic, boosted the top line.
Digital sales grew 9.2% while comparable traffic was up 8.1%. More than 95% fourth-quarter sales were fulfilled by its stores, Target said.
Margins eroded in the fourth quarter due to multiple headwinds. Increased supply chain costs due to higher compensation and headcount in the company’s distribution centers as well as freight and merchandising costs weighed on the margins, the company said. The company said the current-quarter operating margin rate will be “well below its first quarter 2021 rate of 9.8%”.
