Meanwhile, traffic saw an uptick in FY23, growing 0.9 per cent, a follow-on from 3.9 per cent in Q1 FY22, the company said in a media release.

Target's operating income in Q1 FY23 was $1.3 billion, marking a slight decrease of 1.4 per cent from the same period last year. The drop is primarily due to the rise in the company's selling, general and administrative expenses. The company’s operating income margin rate was 5.2 per cent in Q1 FY23, slightly down from 5.3 per cent in Q1 FY22. However, the company's gross margin rate improved to 26.3 per cent, up from 25.7 per cent last year.

The first quarter GAAP and adjusted EPS stood at $2.05, with an operating margin rate of 5.2 per cent, beating expectations, reflecting a higher gross margin rate compared with last year.

The first quarter saw Target's selling, general and administrative expense rate increase to 19.8 per cent, up from 18.9 per cent in Q1 FY22.

"We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we've established with our guests. It's required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now. Thanks to the team's dedication, we saw an increase in guest traffic in Q1, with total sales increasing and profitability ahead of expectations,” said Brian Cornell, chair and CEO of Target Corporation.

Inventory at the end of Q1 FY23 was 16 per cent lower than last year. This was due to a more than 25 per cent reduction in discretionary categories, partially balanced by inventory investments in rapidly growing frequency categories and strategic investments to support long-term market share opportunities.

Fibre2Fashion News Desk (DP)