United States’ second largest retail chain, Target Corp (NYSE: TGT) reported better-than-expected fiscal third-quarter results on Thursday. The company’s profit benefited from sale its consumer credit-card business. Meanwhile wider array of food products and discounts for cardholders brought more shoppers to TGT’s doorstep, boosting sales.
The company also upwardly revised its guidance on fiscal fourth quarter earnings to $1.64 to $1.74 a share even as analysts polled by Thomson Reuters are expecting it at $1.51 a share.
In the backdrop of macroeconomic uncertainty, Target was searching ways to push up its sales as its core customer base, the lower income group, spent money thriftily. Accordingly, the company added fresh food on shelves in many of its stores, used marketing techniques such as ‘Christmas in July’ to exhort customers spend money beyond the holiday season. Recently the company announced that it will open its stores at 9 p.m. on thanksgiving night. The company is also considering expanding its presence in Canada from next year.
For the fiscal third quarter ended October 27, the company reported profit of $637 million or 96 cents a share, compared to profit of $555 million or 82 cents, in the year earlier quarter. During the quarter, the retailer sold its consumer credit-card business to TD Bank Group, resulting in 15% jump in net earnings.
Non- GAAP earnings, that is, earnings after excluding the impact of onetime gains, climbed to 90 cents from 86 cents, in the corresponding period of last year.
Earlier in August, the company had projected earnings guidance of 83 cents to 93 cents, which was above Street’s estimate.
Revenue for the period climbed 3.2% to $16.93 billion, beating analysts’ consensus forecast of $16.92 billion. Gross margins shrunk to 31.7% from year earlier quarter’s 31.9% as input costs jumped by 3.6%.
Meanwhile, its bigger rival, Wal-Mart Stores Inc (NYSE: WMT) reported 9 % jump in fiscal third quarter earnings; nevertheless, revenue fell short of Street’s consensual estimate. Wal-Mart also downwardly revised its guidance on full-year earnings while its outlook on fiscal fourth quarter earnings was also below analysts’ expectation.