CORRECTED - Target lifts profit forecast after holiday sales jump
Shares of the Minneapolis-based chain rose as much as 4 percent to hit a near one-year high of $69.88 after the company raised its fourth-quarter profit forecast to $1.30-$1.40 a share from an earlier range of $1.05-$1.25.
That was well above analysts` average forecast of $1.22 per share, according to Thomson Reuters I/B/E/S.
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Target is slated to have poured $1 billion of last year`s profits into an effort to boost sales, mainly by investing in online business and delivery options to take on Amazon.com Inc
It has hired more staff, remodelled existing stores and focused on building small-format stores to reach more customers in suburbs.
On Tuesday, the company said same-store sales rose 3.4 percent in November and December and that its online sales growth was on track to report its fourth straight year of more than 25 percent gains.
"Target`s brick-and-mortar customers are growing in their affinity to the Target online interface, pricing on hot products in the fourth quarter and the ability to deliver in time," Jim Fosina, Chief Executive of Fosina Marketing Group said.
The lack of strong retail and online players who sell both toys and electronics is likely to have helped the company keep its loyalists away from Best Buy Co Inc
Target raised its same-store sales growth forecast for the quarter ending January to 3.4 percent from a prior forecast of flat to up 2 percent earlier.
Research firm Retail Metrics` President Ken Perkins said that, if that target were met, it would be the company`s strongest quarterly gain since the first quarter of 2012.
Target is the latest in a run of relatively upbeat holiday sales numbers from brick-and-mortar retailers who have suffered most from the huge gains made by Amazon.com
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Target said same-store sales in November and December gained in all five of its core merchandise categories: home, apparel, food & beverage, hardlines and essentials.
Kitchen items from brands like Threshold, KitchenAid and Keurig, and cordless vacuums from Roomba and Dyson were popular gifting items.
An exclusive furniture and household goods brand, co-designed by TV personalities Chip and Joanna Gaines, was also a hit after launching in November, the company said.
Target`s fourth-quarter profit forecast includes a 6 cent to 8 cent benefit from the newly-approved reduction in Federal corporate tax rates.
(This version of the story was corrected to remove reference to Target being No. 2 U.S. retailer in paragraph 1)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
12:50 AM IST