Target Q4 Results: What To Expect

Target Q4 Results: What To Expect

The company has experienced strong same-store sales growth.

After some online performance issues this holiday season, Target is set to reveal its fourth quarter report on Wednesday with analysts expecting the retailer to outperform its longstanding discount-retail rival, Wal-Mart.
 
Wall Street predicts the Minneapolis-based retailer will wrap the final quarter of its fiscal year 2015 at $1.54 earnings per share, landing Target within its own fourth quarter guidance of $1.48 to $1.58. This implies Target will have experienced year-over-year earnings per share growth of 2.7 percent.
 
Wal-Mart, for comparison, reported earnings per share of $1.43 last Thursday, which fell 10 cents from the year-ago period. Altogether, Wal-Mart’s profits fell 8 percent in its fourth quarter due to challenges in China, Brazil and Britain, along with a lack of online sales growth.
 
Target’s ecommerce improvements (or lack thereof) have been in the spotlight for the company and analysts alike. CEO Brian Cornell called for 40 percent year-over-year growth, which was deemed “not feasible” by Amy Koo, a principal analyst for retail consulting company Kantar Retail. Deutsche Bank agrees that Target will not meet its projected online growth and will report fourth quarter digital sales increases around 20 percent from the same period last year.

In contrast, e-commerce giant Amazon recently said its fourth quarter sales rose 26 percent.

Screen-Shot-2016-02-22-at-2-59-25-PM.jpgAnalysts surveyed by Zacks Investment Research expect Target's “series of initiatives”—including its emphasis on smaller format stores, merchandise expansion of Style, Baby, Kids and Wellness category items, and push toward grocery delivery—will augment its fourth quarter performance.
 
In Target’s third quarter release, Cornell said the company was putting the finishing touches on the $1.9 billion sale of its pharmacy and clinic business to CVS Health. The company would reveal more details about the CVS-Target transition at a later date. Analysts anticipate Target will outline that in Wednesday’s report.
 
The company’s stock is also expected to fair well Wednesday, as Zacks Investment Research has Target pegged as one of its “stocks likely to beat earnings estimates.”