Target lifts profit forecast after holiday sales jump
(Reuters) - Target Corp <TGT.N> reported strong same-store sales for November and December on Tuesday, more customer visits and higher online sales, putting the United States' second largest mass retailer on track for the best quarter in five years.
Shares of the Minneapolis-based chain rose 4.2 percent in premarket trading and were set to open at a near one-year high of $70, gaining steam after also raising its profit forecast.
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Target poured $1 billion of its profits into an effort to boost sales last year, mainly by investing in its online business and delivery options to take on Amazon.com <AMZN.O>.
It also hired more staff, remodeled existing stores and focused on building small-format stores to reach more customers in suburbs.
On Tuesday, the company said same-store sales rose 3.4 percent in November and December.
"Target invested heavily in holiday 2017, ramping up its hiring to 100,000 - well above year ago levels - as well as (investing) in new brands," Retail Metrics President Ken Perkins said. "It was a strong holiday (for them)."
The retailer raised its same-store sales growth forecast for the quarter ending in January to 3.4 percent from a prediction of up to 2 percent growth earlier.
Perkins said that, if met, that would be Target's strongest quarterly gain since the first quarter of 2012.
"Our holiday season performance reflects meaningful investments in our team, increasing wages, staffing and training to deliver elevated service and expertise," Target Chief Executive Brian Cornell said in a statement.
Target is the latest in a run of relatively upbeat holiday sales numbers from brick-and-mortar retailers who have suffered most from the huge gains made by Amazon.com <AMZN.O> and other online retailers over the past decade.
Shares of department store chain Kohl's on Monday surged after it reported a 6.9 percent rise in same-store sales for the same months.
Target said same-store sales in November and December saw strong gains in all five of its core merchandise categories: home, apparel, food & beverage, hardlines and essentials.
Kitchen items from brands like Threshold, KitchenAid and Keurig, and cordless vacuums from Roomba and Dyson were popular gifting items. An exclusive furniture and household goods brand co-designed by TV personalities Chip and Joanna Gaines was a hit after launching in November, the company said.
Target expects fourth-quarter adjusted earnings of $1.30 to $1.40 per share, compared with a previous forecast of $1.05 to $1.25.
The forecast includes a 6 cent to 8 cent benefit from the newly-approved reduction in corporate tax rates.
Analysts on average expect a profit of $1.22 per share, according to Thomson Reuters I/B/E/S.
(Reporting by Siddharth Cavale and Vibhuti Sharma in Bengaluru; Editing by Bernard Orr)