*

Reports Q4 adj. EPS of $2.98 vs $1.89 a year earlier

*

Forecasts FY adjusted EPS $8.60-$9.60 vs $9.14 est

*

Reports Q4 comparable sales -4.4% vs -4.6% est

*

CEO says 2024 priorities include boosting store traffic

By Siddharth Cavale and Savyata Mishra

March 5 (Reuters) - Target ( TGT ) on Tuesday reported

higher holiday-quarter earnings on a smaller-than-expected sales

decline and predicted that annual comparable sales would come in

largely above Wall Street expectations.

The mass merchandiser is banking on same-day services,

product launches and a new membership program to boost spending

at its stores.

Target ( TGT ) reported adjusted earnings of $2.98 per share in the

fourth quarter, compared to $1.89 per share in the same period a

year earlier. Analysts on average were expecting $2.42 per

share, according to LSEG estimates. It wasn't immediately clear

if the figures were comparable.

Total comparable sales in the November to January period

fell 4.4% compared with the 4.6% decline analysts were

expecting, in part due to a recovery in sales on Target.com.

Online sales fell 0.7% during the fourth quarter, an improvement

from the 6% decline in the previous quarter.

Robust Black Friday and Cyber Monday spending helped drive

holiday-quarter sales, the company said, and shoppers gravitated

to newly launched collections such as Kendra Scott jewelry and

private-label Figmint line of kitchenware.

Shoppers also responded to same-day pickup services, such as

Drive-up, which made up more than 10% of total sales in the

quarter, the company said.

The quarter marks the end of a challenging year for Target ( TGT ).

During the second quarter, Target ( TGT ) reported its first decline in

store visits and comparable sales since before the pandemic as

inflation limited Americans' spending on discretionary items,

which accounts for 50% of Target's ( TGT ) revenue.

Commerce Department data showed that prices on a basket of

goods and services continued to tick up in January.

The chain also faced unique challenges including a backlash

in May over its LGBTQ-themed merchandise and a surge in retail

crime that it said led to the closure of nine stores in New

York, San Francisco, Seattle, and Portland, Oregon.

Bigger rival Walmart ( WMT ) said last month that inflation

is driving shoppers to hunt for value on everyday goods, though

there are signs that discretionary spending is picking up.

Looking ahead, Target ( TGT ) will focus on rolling out new products

and services, including a new Target Circle membership program,

to reignite sales, traffic and market share gains in 2024,

Target's ( TGT ) CEO Brian Cornell said in a statement.

Media reports last month said Target ( TGT ) was weighing a new paid

membership program similar to Amazon's ( AMZN ) Prime and

Walmart's ( WMT ) Walmart Plus program.

Target ( TGT ) introduced its earnings outlook for 2024, saying it

expects adjusted earnings between $8.60 to $9.60 per share. The

midpoint of that range was largely in line with analysts'

expectations of $9.14 per share, according to LSEG data.

Comparable sales are expected to be in a range of flat to up

2% this year, compared to analysts' average expectations of

0.86% rise.

Gross margins in the fourth quarter ended Feb. 3 rose to

25.6%, from 22.7% a year earlier, aided by lower freight and

supply-chain costs, healthy inventory and lower markdowns.