Big changes help Target hit the bullseye in Q3

Marketing and merchandising changes at Target Corp. are paying off as the retailer reported better than expected traffic and sales in the third quarter.



For the quarter ended Nov. 1, Target reported a same-store sales increase of 1.9%. Net sales rose 2.1% to 17.6 billion.



Profit rose to $549 million, or 87 cents per share, up from $352 million, or 55 cents per share in the year-ago period. Not including one-time items, the company earned 86 cents per share, which was in line with Wall Street expectations.



The company raised its full-year earnings forecast for the second time in three months, and said it now expects earnings of $4.65 to $4.75 per share for the year.



“The third quarter marked the fourth consecutive quarter in which we have grown traffic, and Target’s sales growth continues to be led by our signature categories: style, baby, kids and wellness,” said Brian Cornell, chairman and CEO, Target. “Our momentum is encouraging, especially in the face of stiffer prior-year comparisons. As we look forward to the fourth quarter, our team is focused on strong execution throughout the holidays, and we are confident in our merchandising and marketing plans as we enter the most critical season of the year.”




Target’s digital sales increased 20%, outpacing the industry but missing Target's expectations. The retailer said its digital channel contributed 0.4 percentage points to same-store sales growth.



Last month, Target announced an aggressive new plan to lure shoppers this holiday season that includes free shipping on all orders and a new international website. The plan is part of Target CEO Brian Cornell’s efforts to restructure the company and revamp its digital and in-store offerings.



"Target is starting the season with momentum in our business, anchored by increased store traffic and strength in our signature categories of baby, kids, style and wellness. The work we’ve done throughout the past year puts us in a position to deliver the convenient services and differentiated product our guests count on from Target, especially during the holidays,” Cornell said. “I’m confident that guests will find an easy, inspiring, and most importantly, seamless experience at Target no matter how they choose to shop.”



Target’s results follow Walmart’s third-quarter report, which showed increased sales but lower profits. Last week Macy’s, Nordstrom and Dillard’s posted weak quarterly sales figures, although chains such as TJX and Home Depot reported stronger sales.



Minneapolis-based Target Corp. operates 1,805 stores and at Target.com.