Target upbeat about holidays after 3Q climbs
MINNEAPOLIS (AP) — Target Corp. is optimistic heading into the critical holiday shopping season after a strong third quarter.
The holiday shopping season can make up 40 percent of a retailer's annual revenue — and Target expects this year to be "highly competitive and promotional," said Kathryn Tesija, executive vice president of merchandising.
"For the holiday season, consumers anticipate spending slightly more than last year, but indicate they'll be focused on value, pricing and promotions," she said on a call with analysts.
The big-box retailer, known for its cheap but trendy merchandise, on Thursday reminded investors of the initiatives it's betting on for growth in the coming weeks, including a holiday collection partnership with luxury department store Neiman Marcus and a new online price matching program.
For the fourth quarter, which ends in January, the company anticipates adjusted earnings of $1.64 to $1.74 per share. Analysts predict $1.51 per share.
Target's stock added $1.41, or 2.3 percent, to $62.49 in afternoon trading Thursday.
Target's upbeat view contrasts with rival Wal-Mart Stores Inc. The world's biggest retailer on Thursday issued a fourth-quarter profit outlook that came in below Wall Street expectations.
For the three months ended Oct. 27, Target earned $637 million, or 96 cents per share. That's up from $555 million, or 82 cents per share, a year earlier.
The current quarter's performance included a 15-cent gain tied to the retailer's sale of its consumer credit-card business to TD Bank Group.
Target, which had been looking for a buyer for nearly two years, announced the deal last month.
Removing certain items, the chain's earnings were 90 cents per share. Analysts expected 78 cents per share, according to a FactSet poll.
Revenue climbed 3 percent to $16.6 billion from $16.05 billion, but missed Wall Street's $16.91 billion forecast.
Revenue at stores open at least a year, a key retail metric, rose 2.9 percent, slower than last year's 4.3 percent increase. This figure excludes results from stores recently opened or closed.
The company said customers spent more on each visit, and cited strong sales of food, health and beauty products, and back-to-school items.