Target CEO Cites Stores' Major Role in Its Revised Holiday Sales Guidance
Target raised Q4 and full-year guidance Tuesday, citing “strong traffic growth,” and continued strength in digital sales. Comparable sales in November and December grew 3.4 percent, vs. a projected 0 to 2 percent, it said. Stores fulfilled 70 percent of Target's digital volume in November/December through order pickup and shipping items directly to customers, meaning stores enabled about 80 percent of the company’s comp sales growth in the period, blogged CEO Brian Cornell Tuesday.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Comp sales grew across Target’s core categories: home; apparel; food and beverage; hardlines, which includes electronics; and essentials, said the retailer. Top-selling electronics were the Nintendo Switch, Apple Watch and iPad. Cornell said. The retailer was pleased with customers’ reaction to a first-time sales offering, Weekend Deals, timed for the high-volume period when twice as many consumers shop vs. the average workday, he said.
Target’s holiday season performance reflects investments in its team, including increased wages, staffing and training to deliver “elevated service and expertise,” said Cornell. Target raised the minimum hourly wage to $11 in October and plans to bump it up incrementally toward a $15 minimum wage by year-end 2020, it said.
In 2018, Target will build on initiatives begun last year by launching additional brands, expanding digital capabilities, opening 30 small-format stores and remodeling more than 325 stores as part of a 1,000-store remodel effort through 2020, Cornell said. It will rapidly scale same-day delivery and drive-up service, enabled by Target’s acquisition of Shipt, he said.
Combined with the impact of a 53rd week in the 2017 fiscal year, Target's total sales are expected to grow more than 9 percent in Q4, said a Tuesday financial release.
For Q4, Target expects adjusted earnings-per-share of $1.30-$1.40 compared with the prior range of $1.05-$1.25, reflecting a 6- to 8-cent benefit from a lower tax rate in January resulting from the recently enacted Tax Cuts and Jobs Act, it said. Shares closed up Tuesday 2.9 percent to $69.14.