Retail giant Target Corporation (NYSE:TGT) early Wednesday posted much better than expected third quarter earnings and lifted its same-store sales growth forecast amid rising traffic and revenue trends.
The Minneapolis-based company reported Q3 adjusted net income of $1.04 per share, which was a full 21 cents better than the $0.83 analysts expected. Revenues fell 6.7% from last year to $16.44 billion, also beating Wall Street’s view of $16.3 billion.
Q3 comparable sales, also known as same-store sales or simply “comps,” decreased by 0.2% in the latest period, near the high-end of Target’s guidance range of flat to down 2%. Comparable sales are considered a key indicator of a retailer’s health, since they only measure the performance of stores open at least one year.
Looking ahead, TGT forecast Q4 EPS to range from $1.55 to $1.75, which straddles Wall Street’s $1.60 estimate. Target also lifted its Q4 comparable sales outlook to a range of -1% to +1%. That’s up from a previous range of -2% to flat.
The company commented via press release:
“We are very pleased with our third quarter financial results, which reflect meaningful improvement in our traffic and sales trends and much stronger-than-expected profitability,” said Brian Cornell, chairman and CEO of Target. “Favorable gross margin mix and efficient execution by our team drove third quarter EPS performance well beyond our guidance. We also continued to gain market share in key Signature Categories and saw unexpectedly strong sales in the Back-to-School and Back-to-College season. 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 as they bring our merchandising and marketing plans to life throughout the holiday season.”
Target shares surged $6.56 (+9.18%) to $78.00 in premarket trading Wednesday. Prior to today’s report, TGT had fallen 1.61% year-to-date.