Target launches new paid membership program in a bid to drive sales at a time of cautious spending

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by inflation and high borrowing and credit card costs. The company reported its first annual decline in sales — 1.7% — in seven years. Target delivered a 58% increase in fourth-quarter profits and handily beat Wall Street expectations as the retailer cut costs and maintained a lean inventory during the critical holiday season.

Revenue rose slightly in the latest quarter from a year ago and also topped projections. But comparable sales — those from stores or digital channels operating at least 12 months — slipped 4.4%. The declines, however, slowed compared with the 4.9% drop in the third quarter and 5.4% drop in the second.

Target offered a cautious outlook on sales and profits, indicating that sales won't rebound quickly. Still, investors liked the overall news, pushing up shares by more than 12% in afternoon trading. “This is a unique moment to clarify our roadmap for growth," Target’s CEO Brian Cornell told investors at the meeting in Manhattan.

“We are going to be razor-focused on taking market share." Target is more vulnerable than Walmart and other big box discounters. More than half of its annual sales come from discretionary items like toys, fashion and electronic gadgets, things that many Americans have pulled back on buying. But Target has also stumbled because of its own mistakes.

For several quarters, it had to right its inventory levels after being burdened with heavily stocked warehouses in the summer of 2022. The inventory glut forced it to discount heavily to clear out those goods. Target has been trying to strike the right balance between offering good value while also infusing its stores with trendy goods.