Target profit climbs as customer traffic increases
MINNEAPOLIS (AP) — Target says its sales rose 1.9 percent at established locations in the third quarter as it worked to revive its business by strengthening flagship categories like clothing and children's products.
Still, the uptick was a slowdown from the previous quarter, when sales rose 2.4 percent at established locations. Growth of digital sales also slowed to 20 percent, and fell short of the company's expectations. Previously, Target had forecast digital growth of 30 percent for the period.
Its shares fell almost 5 percent by midday Wednesday.
Looking ahead to the critical holiday shopping season, Target CEO Brain Cornell also said the company is confident about its plans and the Minneapolis-based company expects sales to climb 1 to 2 percent for the final three months of the year. The company lifted the low end of its earnings outlook for the year.
A day earlier, Wal-Mart reported stronger-than-expected sales for its third quarter and said it expected an uptick in sales for the holidays. Moody's vice president Charlie O'Shea noted profit margins for retailers could be affected during the holidays as retailers rely on heavy promotions to draw customers.
Target Corp. was once the discount industry's darling by pioneering the idea of trendy fashions for affordable prices. But the company lost customers during the recession after focusing too much on expanding everyday grocery items like milk. Cornell took over as CEO last year.
For the three months ended Oct. 31, Target said its sales were drive by strength in signature categories including style, baby, kids and wellness.
Profit rose to $549 million, or 87 cents per share in the period. Not including one-time items, the company earned 86 cents per share, which was in line with Wall Street expectations, according to 12 analysts surveyed by Zacks Investment Research.
Revenue rose 2 percent to $17.61 billion. Seven analysts surveyed by Zacks expected $17.63 billion.
Target expects adjusted earnings of $4.65 to $4.75 per share for the full year. It previously forecast a range of $4.60 to $4.75 per share.
Target shares fell $3.92, or 5.4 percent, to $69.99 in midday trading. It shares have declined 9 percent since the beginning of the year, while the Standard & Poor's 500 index has stayed nearly flat. The stock has fallen roughly 3 percent in the last 12 months.
Elements 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 http://www.zacks.com/ap/TGT
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