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Target’s Q4 Reflects Strong Traffic and Comp Sales Growth

Target Corp. posted fourth quarter results that represented a slight beat to Wall Street’s estimates for both sales and earnings per share, and gave it one of its best quarters for strong traffic and comparable sales growth.

In a Nutshell: Brian Cornell, chairman and chief executive officer, said, “Thanks to the dedication of Target’s team, we delivered our strongest traffic and comparable sales growth in well over a decade.”

Charlie O’Shea, Moody’s Investors Service lead retail analyst, said, “Target’s strategic initiatives, announced two years ago, are clearly bearing fruit, with its online push continuing to generate impressive gains.”

The company held an Investor Day meeting with analysts in Manhattan Tuesday, and in the early morning presentation, Cornell noted the game plan that was set two years ago, with 2016 the year for setting in place the go-forward initiatives, 2017 as a transition year, 2018 for innovation and 2019 as the year for “driving adoption and scale.”

Cornell reiterated Target’s goal, which is to be “America’s easiest place to shop,” emphasizing that the retailer has the “most comprehensive fulfillment choices for its customers.”

Sales: Total revenues for the quarter ended Feb. 2 were essentially flat at $22.98 million compared with a year ago, with net sales were also flat at $22.7 million. Comparable sales rose 5.3 percent on traffic growth of 4.5 percent, the company said. Comparable-store sales rose 2.9 percent in the quarter, while comparable digital sales rose 31 percent.

Earnings: Net income fell 26.5 percent to $799 million, or $1.52 a diluted share, against net income of $1.09 billion, or $1.99, a year ago.

Wall Street was expecting EPS of $1.52 on revenues of $22.96 billion.

Looking ahead, Target said it expects a low- to mid-single digit increase in comparable sales for the first quarter, with adjusted EPS between $1.32 and $1.52. For full-year 2019, Target said it expects a low- to mid-single digit increase in comparable sales, with adjusted EPS at between $5.75 to $6.05.

CEO’s Take: Cornell said, “We have been driving an ambitious agenda to transform our company, evolve with our guests and drive strong growth. On every count, we’ve been successful and as we enter 2019, we will continue to lead the industry by adapting, innovating and delivering more for our guests and shareholders.”

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