Target Corp. forecast 2019 profit above Wall Street estimates on Tuesday, as strong online sales and higher footfall at stores drove better-than-expected holiday sales.
The company's comparable online sales grew by 31% in the quarter. In-store traffic grew by 4.5% therein.
"Target's strategic initiatives [...] are clearly bearing fruit, with its online push continuing to generate impressive gains," said Moody's analyst Charlie O'Shea.
Target's comparable sales, which include both in-store and digital sales, rose by 5.3%, beating analysts' estimate of 5.08%, according to IBES data from Refinitiv.
Online contributed 2.4 percentage points to these sales, while the retailer also recorded market share gains across all five of its core merchandise categories, which include home and apparel.
These investments have, however, hurt Target's margins. In the quarter, gross profit margin fell to 25.7% from 26.1% a year earlier.
Delivery Offerings
Target upped its delivery offerings in the highly competitive holiday shopping season, in a bid to get an edge over online behemoth Amazon.com, Inc. and bricks-and-mortar rivals like Walmart, Inc.
The Minneapolis-based retailer offered free two-day shipping on hundreds of thousands of items, and it noted that spruced-up 'buy online and pick up at store' options accounted for three quarters of online sales.
"We have been driving an ambitious agenda to transform our company, evolve with our guests, and drive strong growth," said chief executive officer Brian Cornell. "On every count, we've been successful."
Forecast
The company forecast 2019 adjusted profit between $5.75 and $6.05 per share, above analysts' expectations of $5.61 per share.
Target also expects comparable sales to clock in a low to mid-single-digit increase, while analysts were expecting it to grow at 2.54%.
Excluding certain items, the company earned $1.53 per share – a cent above analysts' expectations. The company's total revenue fell marginally, to $22.98 billion (€20.28 billion), in the quarter ended 2 February, edging past analysts' estimate of $22.96 billion.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
