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Target Corporation (TGT) Q4 Earnings Mixed; Outlook In-Line With Expectations

Target Corporation (TGT) Q4 Earnings Mixed; Outlook In-Line With Expectations

Its acquisition of Whole Foods Market past year has raised the stakes for Target and Walmart, which also sell groceries.

Some 50% of Target's online orders during the holiday quarter were filled by a store and operations chief John Mulligan told analysts that shipping from a store was much cheaper than from a dedicated fulfillment center and that it was cost efficient to retool parts of the stores, with a big ramp up during the holidays, compared to open large new centers.

But the fourth-quarter sales numbers were apparently overshadowed by Target's miss on profit.

During the period, which ended February 3, comps growth of 3.6 percent for Target Corp.'s Q4 of fiscal 2017 was driven by 3.2 percent growth in traffic during the quarter, reflecting solid increases in both stores and digital channels. It also has acquired logistics specialists Shipt and Grand Junction to speed the rollout of same-day deliveries.

Target, which hiked starting pay to $11 an hour last fall, said all workers this spring will receive a minimum of $12 per hour. Target, which was testing curbside pickup at 50 stores, said it also plans to expand to 1,000 locations nationwide.

Target Corp.'s bid to revamp the company and better compete with Amazon.com Inc. and a resurgent Walmart Inc. is taking a toll on profit. Profit came in at $1.37 a share during the period, excluding some items, a cent shy of Wall Street projections. The Minneapolis-based company plans to give more information at its annual investor presentation later on Tuesday.

Brian Cornell, chairman and CEO, said: Our fourth quarter results demonstrate the power of the significant investments we've made in our team and our business throughout 2017.

The retailer posted fourth-quarter earnings that fell short of analysts' estimates, sending the shares down as much as 4.7 percent in early trading.

Revenue rose 10 percent to $22.77 billion, edging out expectations for $22.46 billion. Increased transportation costs for all retailers could crimp margins as well, according to UBS analyst Michael Lasser.

For the twelve months period, TGT disclosed net income of $ 2.94 billion or $ 5.33 per share from the sales of $ 71.88 billion.

Digital sales climbed 29% in the fourth quarter to add 1.8 percentage points to Target's same-store sales growth, and 2017 marked the fourth consecutive year hat the company registered online sales growth in excess of 25%.

The company says it enjoyed healthy sales growth in all five of its merchandising areas, including fashion and home furnishings.

At this time previous year, Target's comparable sales were down 1.5% for the quarter, the third consistent quarterly loss for the mass merchant.

The company expects full-year earnings in the range of $5.15 to $5.45 per share.

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