Surging Holiday Sales Blast Target Past Analyst Expectations


Target saw its shares spike in value this morning (March 5) as it delivered better than expected results for the much-watched holiday quarter. Target reported record adjusted earnings per share and saw digital sales grow by over 25 percent for the fifth consecutive year. At the same time, Target also reported its strongest same store sales and foot traffic in more than 10 years.

“We feel great about the progress, the investments that we’ve made in the stores, our brands and importantly in our team have paid off,” CEO Brian Cornell said on CNBC’s “Squawk Box” after the company released its earnings Tuesday. “And I think that we saw that in our full year 2018 results, but more importantly the guidance for next year.”

By the numbers, Target brought in EPS of $1.53 vs. $1.52 expected by analysts. Revenue was another beat — $22.98 billion brought in as opposed to the $22.96 billion the Street was looking for. Same-store sales saw a big leap — up 5.3 percent as opposed to the 5.1 percent expected.

On an unadjusted basis, net income was down 26.5 percent to $799 million, or $1.52 a share, during its fiscal fourth quarter ended Feb. 2 from $1.1 billion, or $1.99 a share at this time last year. Revenue was about flat at $23 billion. The company further noted that  its eCommerce business contributed 2.4 percentage points to overall same-store sales growth during the quarter.

“We continue to see great performance both from a store standpoint and a digital standpoint,” Cornell said on CNBC.

Target’s full year results were also compelling — same-store sales grew 5 percent in 2018, its best growth since 2015, and eCommerce growth was up 36 percent on the year. Transactions picked up 5.3 percent during Q4, compared with last year’s 3.6 percent growth. Average transaction amounts were also on the rise, up 0.8 percent, as opposed to the growth f 0.4 percent last year.

Traffic was up 4.5 percent.

Looking to fiscal 2019, Target says it anticipates a low-to-mid single-digit increase in same-store sales, and a mid-single digit increase in net income. It’s calling for adjusted earnings of between $5.75 and $6.05 per share. Analysts had been expecting earnings per share of $5.61.

Investors liked what they saw out of the results — Target’s share were up 6 percent as the news broke this morning.