Target Boosts Forecast as Results Beat Views
16 November 2016 - 11:50PM
Dow Jones News
Target Corp. raised its outlook for same-store sales over the
holiday season as the retailer reported better-than-expected
results in the latest , helped by higher online sales and
back-to-school shopping.
Target has been struggling to find an e-commerce strategy to
compete with Wal-Mart Stores Inc. and Amazon.com Inc. Digital
growth had decelerated for two consecutive quarters, slowing to 16%
during the second quarter, but picked up to 26% in the three months
ended in October.
For the that ended in October, Chief Executive Brian Cornell
said the company saw improved traffic and sales trends, helped by
higher market share and "unexpectedly" strong back-to-school
performance. Same-store sales edged 0.2% lower in the latest
quarter, the second consecutive decline, but were at the higher-end
of the company's projection that same-store sales would be flat to
down 2%.
For the year, Target now expects adjusted per-share earnings in
a range of $5.10 to $5.30, compared with prior guidance of $4.80 to
$5.20. The difference between the ranges reflects early
debt-retirement losses and a small benefit from the resolution of
income tax matters, the company said. However, the guidance boost
is still below Target's original full-year earnings forecast of
$5.20 to $5.40 a share.
The results come as Target has been trying to fix its grocery
business, which generates about $18.5 billion in annual sales for
the retailer. The U.S. is on track this year to post the longest
stretch of falling food prices in more than 50 years, a boon to
shoppers at the checkout line but a financial strain on farmers and
grocery stores. The trend is being fueled by an excess supply of
dairy products, meat, grains and other staples and less demand for
many of those same products from China and elsewhere due to the
strong dollar.
Over all for the October quarter, Target earned $608 million, or
$1.06 a share, up from $549 million, or 87 cents a share, a year
earlier.
Excluding special items, per-share profit rose to $1.04 from 86
cents. The company guided for earnings in a range of 75 cents to 95
cents a share on an adjusted basis.
Sales fell 6.7% to $16.44 billion from $17.61 billion a year
ago, reflecting the sale of its pharmacy business to CVS Health
Corp. last year. Analysts expected $16.3 billion in the latest
.
For the fourth quarter the company boosted its same-store sales
guidance to a range of down 1% to up 1%, compared with its prior
guidance for down 2% to flat.
Target said it expects to earn an adjusted $1.55 to $1.75 a
share, compared with the $1.60 analysts have expected, according to
Thomson Reuters.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
November 16, 2016 07:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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