MINNEAPOLIS — Target Corp. on Wednesday posted fiscal third-quarter profits and sales that exceeded expectations. The retailer also raised its forecast for fourth-quarter sales and full-year earnings.
Target earned $1.04 per share in the third quarter on sales of $16.4 billion. Analysts had expected earnings of 83 cents a share on $16.3 billion in revenue, according to Thomson Reuters. In the prior-year period, Target earned 86 cents a share on sales of $17.6 billion.
“We are very pleased with our third quarter financial results, which reflect meaningful improvement in our traffic and sales trends and much stronger-than-expected profitability,” said Brian Cornell, chairman and chief executive officer of Target. “Favorable gross margin mix and efficient execution by our team drove third quarter EPS performance well beyond our guidance. We also continued to gain market share in key signature categories [baby, style, children and wellness] and saw unexpectedly strong sales in the back-to-school and back-to-college season. As we move into the biggest quarter of the year, we are pleased with our inventory position and confident that our team will deliver a great guest experience as they bring our merchandising and marketing plans to life throughout the holiday season.”
Target now forecasts comparable-store sales in its holiday quarter to range from -1% to 1%, compared to its earlier estimate of from -2% to flat.
For full-year 2016, Target now expects per-share earnings from continuing operations of $4.67 to $4.87, compared with prior guidance of $4.36 to 4.76. The company expects full-year 2016 adjusted EPS of $5.10 to $5.30, compared with prior guidance of $4.80 to $5.20. The difference between these ranges reflects early debt-retirement losses, a small benefit from the resolution of income tax matters and items related to the sale of its pharmacy business to CVS Health. Target also bought back $878 million of stock in the period.
“As we move into the biggest quarter of the year, we are pleased with our inventory position and confident that our team will deliver a great guest experience as they bring our merchandising and marketing plans to life throughout the holiday season,” Cornell said.
Target’s digital sales increased in the third quarter, with comparable online sales up 26% from a year earlier. The company said that during the year-end holiday period it would offer free shipping to drive sales. Target also expects to drive holiday sales via a 15% increase in its exclusive toy offerings, to 1,800, and to kick off its Black Friday sale at 6 p.m. on Thanksgiving Day.