Target Announces First Quarter 2019 Results

Targeted shares skyrocketed on Wednesday after the discount retailer announced earnings and sales in the first quarter that exceeded analysts' expectations, attracting more people to its stores and persuading them to spend more.

Target's online sales have also grown 42%, as buyers are turning more and more to its curbside online ordering service, which Amazon can not offer.

Despite the imminent threat of enforcing 25% tariffs on clothing and footwear imported from China, Target has maintained its outlook for the year. The optimistic report contrasts with those of department store chains earlier this week, which largely disappointed investors.

Target stocks jumped nearly 10% on news.

This is what the big box retailer has compared to the expectations of analysts, based on the Refinitiv data:

• Adjusted earnings per share: $ 1.53 vs. $ 1.43 expected
• Revenues: $ 17.63 billion versus $ 17.52 billion forecast
• Same store sales: up 4.8% from 4.2% growth expected

CEO Brian Cornell said Target was "well positioned to generate strong financial performance in 2019 and beyond."

In a post-profit interview with analysts, he said that Target's activities for babies and toys had outperformed other categories in the last quarter, and that Target had benefited from the increase traffic around Valentine's Day and Easter weekend.

"We continue to see a healthy economic environment for our company," he said.

Net income reached $ 795 million, or $ 1.53 per share, compared to $ 718 million, or $ 1.33 per share, a year ago. It was 10 cents ahead of analysts' estimates.

Total revenues increased 5% to $ 17.63 billion from $ 16.78 billion last year. This beat is estimated at 17.52 billion dollars.

Sales at Target stores and its online business that has been active for at least 12 months increased by 4.8%, representing better-than-expected growth of 4.2%. This marks eight consecutive quarters of sales growth per store for Target. Target reported that traffic in the stores was up 4.3%, the total number of transactions was up 4.3% and the average transaction amount up 0.5%.

Digital sales jumped 42% and online purchases now account for 7.1% of Target's total transactions, up from 5.2% a year ago.

Target still claims that sales per store will be less than 5% for the year, with an increase in operating profit of 5% and adjusted earnings per share of between $ 5.75 and $ 6.05. .

Target's earnings are similar to those of its competitor Walmart, which has seen its margin pressure decrease thanks to increased sales of its clothing and private label brands and its private label power options. Target hoped to see more similar results.

During the last quarter, Target said its newly launched nightwear brands, Auden, Stars Above and Colsie, were well received. The company is one of many retailers who are trying today to take market share in Victoria's Secret. Target also launched this quarter a brand of environmentally friendly cleaning products, Everspring.

"When we integrate our merchandising efforts into all the other initiatives that run our business … something really special happens for our customers," said Mark Tritton, Executive Director, Analyst. "Target becomes more relevant to them and they choose to buy us more often."

Earlier this month, Morgan Stanley upgraded Target's stock by calling it a retail "survivor". The company said it thought that Target had overcome its "maximum margin difficulties" because it was investing in its stores, its website and its supply chain. These investments had previously destroyed profits.

"There are now signs that Target's deleveraging is shrinking, particularly as it is investing in options for realization … that drive more traffic and reduce costs." ", said Morgan Stanley.

Target's gross margin rate decreased slightly in the first quarter, as the company attributed this decrease to higher supply chain and digital execution costs.

Target has also sparked interest this month about the launch of its limited-edition range, along with Vineyard Vines brand preppy clothing and accessories. Last weekend, when items arrived at the stores, crowds of buyers arrived before opening hours. Target has used such collaborations in the past to generate traffic.

Target said Tuesday that the launch of Vineyard Vines was already "one of the most successful collaborations" of the brand so far. The results of this analysis should be included in Target's next quarter results.

Targeted stocks are up about 8.8% for the year, bringing its market capitalization to about $ 39.8 billion. Walmart shares have risen by about 8.5% so far this year.