Target Q1 Beats Expectations; Digital Sales Up 38%

by MR Magazine Staff May 21, 2015

Target Store 2013Target reported first-quarter earnings that topped analysts’ expectations.

The company earned 98 cents a share, with adjusted earnings of $1.10 a share. Analysts expected $1.03 a share, according to Thomson Reuters.

The stock rose as much as 1.9% to $79.40 in New York after the results were released, according toBloomberg Business. It had gained 2.6% this year through Tuesday’s close, compared with a 3.3% advance for the Standard & Poor’s 500 Index. Wal-Mart Stores Inc., meanwhile, is down 11% so far in 2015.

Target was most recently buzzed about for its Lilly Pulitzer collaboration, which sold out instantly, causing smiles for the retailer but frowns for many frustrated customers.

Target’s first quarter earnings summed up:
*The Company now expects full-year 2015 Adjusted EPS of $4.50 to $4.65, compared with prior guidance of $4.45 to $4.65.
*First quarter comparable sales increased a better-than-expected 2.3%, driven by growth in both transactions and basket size.
*Digital channel sales increased 37.8%, contributing 0.8 percentage points to comparable sales growth.
*Comparable sales in signature categories (Style, Baby, Kids and Wellness) grew more than double the company average.
*Target returned cash through share repurchase for the first time since the second quarter of 2013, with purchases of $562 million in shares of common stock in the first quarter. Including dividends, the company returned $895 million to shareholders in the first quarter, more than 140% of net income.

“We’re pleased with our first quarter traffic and sales, particularly in our signature categories, which drove better-than-expected profitability through improved gross margin and continued expense management,” said Brian Cornell, chairman and CEO of Target. “We’re encouraged to see early progress on our strategic priorities, including strong sales growth in Apparel, Home and Beauty, nearly 40% growth in digital sales, and positive traffic in both our stores and digital channels. We continue to benefit from strong execution by our stores team, who overcame weather challenges and West Coast port delays to deliver outstanding guest service in the first quarter.”