Target Corporation (TGT) reported third-quarter sales and earnings results that beat both its own guidance and Wall Street expectations.
Total sales increased by 2.8% to $17.7 billion, driven by a 1.9% increase in U.S. sales to $17.3 billion, and a 44 percent increase in Canada to $358 million that was moderately below expectations.
U.S. comparable store sales rose by a better-than-expected 1.2%, helped by a more than 30 percent increase in e-commerce, among the highest in the industry, owing to the popularity of the company’s Cartwheel mobile app. Canadian comps increased by 1.6%.
The company reported on its earnings conference call, the first for CEO Brian Cornell, who replaced Gregg Steinhafel in the top spot in August, that comp sales in apparel were down slightly as increases in baby and childrenswear were more than offset by softness in jewelry, accessories and intimates. However, the home goods segment was apparently strong, since comps in the combined home and apparel segments were the strongest they’ve seen in two years.
To boost apparel sales, the retailer is rolling out new fixtures and departmental layouts –complete with mannequins–to a total of 650 stores.
Chief merchant Kathee Tesija mentioned licensed goods based on Disney’s Frozen and the new Teenage Mutant Ninja Turtle movie are expected strong holiday sellers.
Net income of $352 million, or $0.54 per share, was above the range expected by analysts of $0.40 to $0.50, and a 3.1% increase from $341 million, or $0.56 per share in the prior year’s third quarter. The disappointing Canadian division lost $211 million before interest and taxes, bringing its year-to-date loss to $627 million.
For the fourth quarter, given the promotional activity that it expects in the discount sector, the company is expecting a moderate comp store sales gain of 2 percent, which should offer easy comparisons from last year’s quarter in which the massive data breach unexpectedly dampened results.
The company finished the quarter with 1801 U.S. and 133 Canadian stores.