Target Corp. posted stronger-than-expected holiday sales amid a surge in traffic to its stores and website.
Target’s same-store sales in the combined November/December period rose 5.7%, ahead of 3.4% growth in the year-ago period. The results reflected strong traffic, positive store comps and comparable digital sales growth of 29%, the retailer said. All of Target’s core merchandise categories posted growth, led by toys, baby and seasonal gifts.
Target said store pickup and drive-up for online orders surged more than 60% from a year ago, and accounted for a quarter of the company’s digital sales in the holiday period. The company expects that 2018 will be the fifth consecutive year in which its online sales grow more than 25%.
“We are very pleased with Target’s holiday season performance, which came on top of really strong results in the same period last year,” said Brian Cornell, chairman and CEO, Target. “This performance demonstrates the benefit of placing our stores at the center of every way we serve our guests, including both in-store shopping and digital fulfillment.”
Target reaffirmed its full-year earnings and sales forecast, putting it on track for the strongest full-year comparable sales growth since 2005.
The company also forecast market-share gains across all of its core merchandising categories and double-digit growth in adjusted EPS.
“In 2019, we expect to build on this momentum as we gain further scale in our fulfillment capabilities and deliver profitable growth throughout the year,” the retailer stated.
Analyst Neil Saunders, managing director of GlobalData Retail, commented that Target gave everything it had to this holiday season, “pulling out all the stops on merchandise, omnichannel services, and marketing” and that its efforts paid off.
“Over the past couple of years, Target's store execution on festive products has been patchy,” said. “However, this year Target won Christmas with a very compelling and well-executed assortment of decorations, decor, gifting, and food. Conversion rates for holiday products were up sharply on last year and we believe that Target was a key destination for many households buying Christmas essentials.” (For more commentary, click here
Target continues to expect fourth quarter 2018 comparable sales growth of approximately 5%. For the full year, the company continues to expect adjusted EPS of $5.30 to $5.50 and GAAP EPS of $5.41 to $5.61. The 11-cent difference between expected full-year adjusted EPS and GAAP EPS is driven by discrete items already reported through third quarter 2018.