Target Raises Outlook For Holiday Season Following Better-Than-Expected Q3
Unexpectedly strong sales in back-to-school items and significant online sales gains pushed Target to better-than-expected results for its August through October sales period.
While speaking with reporters and analysts Wednesday morning, Target executives, including CEO Brian Cornell, voiced confidence in the Minneapolis-based retailer’s chances of success during the crucial holiday season.
Target raised its comparable sales guidance for the fourth quarter to a range of a 1 percent increase to a 1 percent decrease. Previously, the retailer was forecasting sales to be flat or fall as much as 2 percent.
After reporting a 26 percent year-over-year rise in online sales during the third quarter, Target looks to continue its growth of web-based sales by offering free shipping for all purchases until the end of the year. Most brick and mortar retailers, including local competitor Best Buy, only plan to offer free shipping until the end of Christmas.
Recent reports have suggested shoppers, including those in the Twin Cities, will spend record amounts this year, which Target has said it will aim to capitalize on with extended store hours and an array of Black Friday and holiday deals.
In all, the company’s third quarter sales fell 6.7 percent to $16.4 billion after reporting $17.6 billion for the same period last year. Wall Street was predicting sales of $16.3 million. Target said its sales drop was chiefly due to the removal of its pharmacy and clinic business, which was sold to CVS Health Corporation.
Profits for the quarter totaled $608 million, or $1.07 per share—a roughly 11 percent rise from the $549 million in profits and earnings per share of 88 cents it reported a year ago.
A weak spot for Target, once again, was its grocery business, which Cornell said experienced a drop in sales.
“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…throughout the holiday season,” Cornell added.
Following the quarterly report, Target’s stock leapt nearly 9 percent in early morning trading, from a Tuesday close of $71.44 to as high as $77.92 on Wednesday.