The retailer’s Q3 performance topped estimates across the board with a sales gain of 1.4 percent to $16.7 billion, besting forecasts for sales of $16.6 billion. Comparable sales edged up 0.9 percent.
Profits fell 21 percent during the period to $480 million, or 88 cents per diluted share. But on an adjusted basis, diluted earnings per share were 91 cents, topping Wall Street’s bets for adjusted diluted EPS of 86 cents.
But looking ahead, the retailer — which this month unveiled a holiday strategy that includes extensive promotions and a focus on in-store order fulfillment — offered a fourth-quarter outlook that missed forecasts. (Target said it now has ship-from-store in more than 1,400 locations.)
During the all-important holiday selling season, Target said it expects comparable sales growth of flat to 2 percent. That performance would translate into full-year 2017 comparable sales growth of flat to 1 percent. Q4 adjusted EPS is expected in the range of $1.05 to $1.25 — missing the average Wall Street bet for EPS of $1.24. For full-year 2017, the company said it now expects EPS of $4.38 to $4.58 and adjusted EPS of $4.40 to $4.60, compared with prior guidance of $4.35 to $4.55 and $4.34 to $4.54, respectively.
Despite the downward adjustments, on a conference call with investors, chairman and CEO Brian Cornell maintained an optimistic posturing on the company’s Q4 prospects — highlighting several strategies that he expects will spur growth.
“In more than 100 of our stores, guests will be enjoying a newly transformed environment this holiday season, courtesy of this year’s remodel program,” he said. “Also, in nearly 30 local neighborhoods across the country, guests will be able to enjoy their holiday shopping in a nearby Target store for the first time.”
Target’s chief also noted the buzzed-about launch of eight new and exclusive brands on Target.com and in stores, which the company has been banking on to lure in shoppers after discontinuing several other brands.
“While the fourth quarter is always intensely competitive, we are entering this holiday season with lots of confidence, enabled by this year’s investments and the tireless efforts of our team,” Cornell said.