Target shares pop as retailer boosts profits, despite lackluster sales forecast

Target on Tuesday posted holiday-quarter revenue and earnings that topped Wall Street's expectations, but the company said it expects another year of weak sales. 

The Minneapolis-based retailer's shares jumped about 8% in premarket trading as it showed progress in boosting profits and margins.

Even so,Target's comparable sales declined for the third quarter in a row. The key metric, which includes digital sales and takes out the impact of store openings, closures and renovations, fell 4.4% in the fiscal fourth quarter. 

Target doesn't anticipate sales will bounce back quickly. For the current quarter, Target said it expects comparable sales to drop by between 3% and 5% and adjusted earnings per share to range from $1.70 to $2.10. The company said it expects full-year 2024 comparable sales to be flat to up 2% and adjusted earnings per share to range from $8.60 to $9.60.

Yet Target stressed its progress after a rough stretch marked by lower discretionary spending. Store and website traffic, while still down year over year, improved for the second quarter in a row. Profits jumped as the company better managed inventory and benefited from falling supply chain, freight and e-commerce fulfillment costs. And an emphasis on lower price points resonated with shoppers. 

In an interview with CNBC's "Squawk Box," CEO Brian Cornell said the company has made "really solid progress"in managing inventory better and becoming more efficient. He said the retailer will focus on "growing traffic and making sure that we make Target a growth company again."

Those new sales drivers for the year ahead will include a membership program, he said. Cornell declined to share more details to CNBC, but said "it's going to be a really important part of what