Target Hits the Bulls-Eye With Latest Earnings Report

The company’s third-quarter earnings and full-year guidance beat investor expectations.

The pressure was on for Target this week as it prepared to deliver its third-quarter earnings report. Walmart managed to exceed Wall Street expectations with its recent earnings report last week, and Target investors were looking for the company to do the same.

Fortunately, Target’s third-quarter earnings did not disappoint. The company’s earnings, revenue, and same-store sales were up, and the company raised its full-year guidance. As a result, Target’s share rose 10% in premarket trading.

Here is an overview of Target’s third-quarter earnings report:

  • Earnings: $1.36 per share, as opposed to $1.19 forecasted
  • Revenue: $18.67 billion, as opposed to $18.49 forecasted
  • Same-store sales: Up 4.5%, as opposed to 3.6% forecasted

An overview of Target’s Q3 earnings

During the third quarter, Target’s revenue grew 4.7% to reach $18.67 billion, which exceeded investor expectations of $18.49 billion. Earnings and same-store sales growth also beat investor expectations.

And the good news didn’t end there; management also raised Target’s full-year earnings guidance. For 2019, Target expects its earnings to fall between $6.25 and $6.45, which is up from previous estimates of $5.90 to $6.20.

But the biggest news for Target may have been its same-store and digital sales growth. The company has been investing heavily in its stores and began offering the grocery delivery service Shipt.

And these investments seem to have paid off; the company’s sales-store sales grew by 4.5%, and digital sales grew by 31% during the third quarter. 80% of the company’s digital sales were either in-store pickups, curbside pickups, or same-day delivery.

Now the company is preparing to head into the holiday shopping season. In October, the company warned investors that it expects to spend an additional $50 million on hiring and increasing overtime hours during the holiday season.  

Intense retail competition lies ahead for Target

Target continues to increase its revenue and drive more customers to its website and stores. This growth is largely thanks to the company’s in-store improvements and focus on building out its digital presence. And the company’s stock is currently up 67% year to date. 

But as Target continues to improve its services, Walmart and Amazon are doing the same thing. Amazon is offering 2-hour delivery with Amazon Fresh, and Walmart continues to strengthen its grocery business as well. It remains to be seen how Target will be able to fight against the increasing retail competition in the coming years.