How Target’s Holiday Shopping Season Strategy Paid Off

Target Corp.’s shares are rallying in morning trading after delivering stronger-than-expected fourth-quarter results bolstered by a solid holiday shopping season.

The big-box retailer saw its stock surge 5 percent after it posted adjusted earnings per share that came in at $1.53, up 12.5 percent from the same period in 2017. Reported profits, however, slid 26.5 percent to $799 million, or $1.52 per share, but modestly beat the $1.51 per share analysts had forecasted.

Despite revenues that remained flat at $22.98 billion — and were roughly in line with estimates — same-store sales shot up 5.3 percent, with retail store sales increasing 2.9 percent and digital sales jumping 31 percent.

“We’re very pleased with our fourth-quarter performance, which capped off an outstanding year for Target. Thanks to the dedication of Target’s team, we delivered our strongest traffic and comparable sales growth in well over a decade, and our 2018 adjusted EPS set a new all-time record for the company,” said chairman and CEO Brian Cornell.

Since rolling out a multiyear growth strategy in 2018, the Minneapolis-based chain has seen the continued success of its in-house brands such as A New Day and Project 62; launched its “buy online, pick up in store” service; and introduced same-day delivery through its Shipt acquisition.

During the all-important holiday shopping season, Target also offered free two-day shipping on hundreds of thousands of products, allowing it to amp up its competition with rivals Amazon and Walmart.

Moreover, the company remodeled more than 300 stores last year, with plans to complete another 300 overhauls in 2019.

“We have been driving an ambitious agenda to transform our company, evolve with our guests and drive strong growth,” Cornell added. “On every count, we’ve been successful, and as we enter 2019, we will continue to lead the industry by adapting, innovating and delivering more for our guests and shareholders.”

For the full year, Target reported adjusted earnings per share at $5.39, a gain of 14.9 percent from the prior-year period. It now expects a low- to mid-single-digit increase in comparable sales for both the first quarter of 2019 and the full year overall.

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