Target Profit Surges After Strong Back-to-School Season

Getty Images              Target is facing challenges in its food business among other areas

Target Corp. (NYSE: TGT) released its fiscal third-quarter earnings report before the markets opened on Wednesday.

Target's relatively upbeat results add to evidence that the retail industry is headed into the holiday shopping season with a tailwind.

Target exceeded Wall Street expectations for the third quarter, and has increased its annual profit outlook. 7 analysts said to HOLD the shares of the company. "We also continued to gain market share in key Signature Categories and saw unexpectedly strong sales in the Back-to-School and Back-to-College season".

Target's Q3 sales decreased 6.7% to $16.4 billion, down from $17.6 billion a year ago, but same-store e-commerce sales grew 26%, contributing 0.7 percentage points to same-store sales growth.Same-store sales declined 0.2%, near the high-end of the guidance range of flat to down 2%. Street analysts have a consensus EPS projection of $0.83 for the current quarter. Online sales climbed 26%, helped in part by a one-day promotion over the summer that gave shoppers 10% off most items online and in its stores.

Under Cornell, Target has been trying to reinvigorate itself to restore its cheap-chic status.

But it's also focusing on value. The top target is presently $89 and the lowest target has the stock reaching $60 within the year.

"As we move into the biggest quarter of the year, we are pleased with our inventory position", Cornell said in a statement.

Target, No. 22 in the Internet Retailer 2016 Top 500 Guide, said online sales accounted for 3.5%, or $575.4 million, of sales during the fiscal third quarter ended October 29, up 21.0% from $475.6 million during the same period previous year, when online accounted for 2.7% of sales.

Results have improved from recent quarters, when competition from online rivals like Inc (AMZN.O) and slower sales of smaller items like electronics and food hurt Target's earnings. That's well above the 83 cents per share that analysts polled by Zacks Investment Research called for.

All of the income growth was driven by almost a $400 million reduction in selling and administration expenses. Target Corp. The business earned $16.44 billion during the quarter, compared to the consensus estimate of $16.30 billion.

Target joins other retailers who've had strong third-quarter performances. This figure includes excludes results from stores recently opened or closed. Target now expects full-year adjusted earnings per share of $5.10 and $5.30, up from a prior forecast of $4.80 to $5.20. And it now expects adjusted earnings per share of $5.10 to $5.30, up from previous guidance of $4.80 to $5.30.

The bottom line (on a per-share basis) has more or less made progress for years, even with the company's multiple stumbles.

Target shares surged $6.56 (+9.18%) to $78.00 in premarket trading Wednesday.

According to Zacks Investment Research, "Target Corporation operates large-format general merchandise and food discount stores in the United States, which include Target and SuperTarget stores". If you are reading this story on another website, that means this article was illegally copied and re-published to this website in violation of US and global copyright law.

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