Why did Target's gross profit fluctuate in recent quarters?

Target's gross profit fluctuated in recent quarters due to a combination of factors: 1. **Strategic Investments**: Target has been investing in digital capabilities and store expansions, which has impacted short-term gross profit margins. For example, the company plans to invest $4 billion to $5 billion in stores, supply chain, and technology to enhance consumer experience. 2. **Cost Savings Efforts**: Target has achieved over $2 billion in cost savings through efficiency efforts over the past two years, which could indicate that previous cost management strategies have had an impact on gross margins. 3. **Inventory Levels**: Target faced challenges with inventory levels, which were up over 7% at the end of Q4. High inventory levels can lead to increased storage costs and potential losses due to overstocking, impacting gross margins. 4. **Tariff Impacts**: The company anticipates outsized profit pressures in Q1 due to tariff uncertainty and startup costs from new stores and remodel projects. Tariffs and supply chain dynamics can significantly affect pricing and ultimately, gross margins. 5. **Seasonal Factors**: Target experienced a sales decline in February due to cold weather and declining consumer confidence. Seasonal factors can influence sales and, consequently, gross profit margins. In summary, Target's gross profit fluctuations are primarily due to strategic investments, cost savings efforts, inventory levels, tariff impacts, and seasonal factors. These factors can vary in impact from quarter to quarter, leading to the observed fluctuations in gross profit margins.