Target feeling the holiday cheer reports surging profits and sales
Target is bursting into the critical holiday season with very strong third-quarter earnings as the company pushes faster delivery and invests heavily in stores and new brands.
The company raised its expectations for the year and shares rose more than 8% to what would be an all-time high before the opening bell Wednesday.
The Minneapolis retailer’s comparable sales, which also include online sales, rose 4.5%. That reflects 2.8% growth in stores open at least a year. Third quarter online sales rose 31%. Customer traffic to its stores and website rose 3.1%.
Target’s strong report offers more evidence that the chains that have focused on low prices and speedier deliveries are winning over shoppers and are able to hold their own against Amazon.com. Walmart last week raised its annual profit expectations after reporting strong third-quarter results helped by its grocery business. Many of Target’s rivals particularly department stores and mall-based clothing chains, are struggling.
Still, the holiday season is expected to be brutally competitive. Faced with the shortest holiday shopping season since 2013, retailers are trying to figure out ways to get into the minds of shoppers early.
Target is spending $50 million more on its payroll during this quarter than it did a year, hiring more workers to help shoppers.
The company is also introducing some new incentives this holiday season such as a new loyalty program called Target Circle. So far, it has signed up more than 35 million people. It found in an early test of the program that customers shopped more frequently and spent 2% to 5% more.
This past fall, it launched a new grocery store label brand called “Good & Gather, which will be expanding to 2,000 products by late next year.
It’s also offering a variety of options to buy, from picking up online orders curbside or in the store. Through Shipt, which it purchased in December 2017, shoppers can get deliveries to their doorstep for a fee in a few hours because there is likely a Target store nearby. The company said Wednesday that same-day services accounted for 80% of its third quarter digital growth
Third-quarter profit was $714 million, or $1.39 per share, including discontinued operations worth 2 cents. Earnings, adjusted to account for discontinued operations and non-recurring gains, came to $1.36 per share, easily beating Wall Street per-share expectations for $1.19.
Revenue was $18.67 billion, also topping projections.
Target Corp. now expected adjusted earnings per-share of $6.25 to $6.45 in 2019, compared with earlier projections of between $5.90 and $6.20.
Shares rose $9.21 to $120.06 in premarket trading.
Portions of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on TGT at https://www.zacks.com/ap/TGT