Media Moves

Coverage: Online shopping pays off for Target

August 17, 2017

Posted by Chris Roush

TargetTarget Corp. reported earnings, revenue and same-stores sales on Wednesday that topped analysts’ expectations for the second quarter, fueled by a jump in online transactions, which sent its stock price soaring.

Lauren Thomas of CNBC.com had the news:

With more shoppers returning to its brick-and-mortar stores and ringing up purchases on Target.com, the discount retailer raised its outlook for 2017, as signs appeared that its turnaround efforts are making progress.

Shares of Target were last climbing around 3 percent on the news.

Here’s what Target reported compared to what Wall Street was expecting, based on a Thomson Reuters survey of analysts:

  • Earnings of $1.23 a share, adjusted, compared with a forecast profit of $1.19 per share.
  • Revenue was $16.43 billion versus an estimate of $16.30 billion.
  • Same-store sales climbed 1.3 percent, better than the expected 0.7 percent growth.

“We are pleased that second-quarter traffic increased more than 2 percent, reflecting growth in both our store and digital channels,” CEO Brian Cornell said in a statement.

Sarah Halzack of Bloomberg Gadfly wrote that the company still has work to do:

For example, it has focused on steering more of its marketing messaging and in-store signage to emphasize low prices. And it has been working to build more distinctive private brands, such as the fast-growing kids clothing line Cat & Jack.

The retailer should also be encouraged by its 32 percent increase in comparable digital sales.

And yet I doubt anyone at its Minneapolis headquarters is popping champagne over Wednesday’s results. That’s because, despite significant improvements, Target still has plenty of work to do to shore up its business.

E-commerce remains a stubbornly tiny share of its business, accounting for just 4.3 percent of total sales this quarter.

Abha Bhattari of The Washington Post reported that private label brands are paying off for Target:

Analysts attributed that growth to Target’s success with private-label brands such as the children’s line Cat & Jack, which Cornell said has racked up $2 billion in sales in one year, and a partnership with Victoria Beckham. Target is taking note: The company is introducing 12 more brands in the next 18 months, and recently announced a partnership with mattress start-up Casper.

“Exclusive new brands like Cat & Jack in kids clothing, Pillowfort in homewares, and Cloud Island in baby have all performed well,” Neil Saunders, managing director at GlobalData, said in a note to investors. “Not only are these brands credible and compelling, but they are also helping to differentiate Target from rivals.”

This week, the Minneapolis-based big-box retailer announced it was buying same-day delivery company Grand Junction as part of its efforts to take on Amazon.com and Walmart. Target is testing same-day delivery services in New York and has begun looking into curbside fulfillment options near its headquarters.

“Grand Junction’s technology and algorithms will help Target deliver to guests faster and more efficiently,” Arthur Valdez, chief supply chain and logistics officer for Target, said in a statement on Monday.

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