Target Smashes Q1 Estimates, Shares Rip Higher

Target Corporation TGT's first-quarter earnings report came in higher than expected, which prompted an 8 percent surge in the stock Wednesday morning.

Target, the second-largest discount retailer in the U.S., earned $1.21 per share in the first quarter on revenue of $16.02 billion; Analysts were expecting the company to earn $0.91 per share on revenue of $15.62 billion.

Net earnings for the quarter rose from $632 million a year ago to $681 million, while comparable sales fell just 1.3 percent; Analysts were expecting a decrease as much as -3.7 percent.

Digital sales rose 22 percent from a year ago and accounted for 4.3 percent of total sales and increased 22 percent, up from 3.5 percent a year ago. The digital channel contributed 0.8 percent to comparable sales in the quarter.

Guidance And Commentary

Target guided its second-quarter earnings per share to a range of $0.95 to $1.15 versus $1.00 per share Wall Street analysts were already expecting. The company also reiterated expectations for a low-single-digit decline in comparable sales and that its full year earnings per share is more likely to come in above the midpoint of its prior guidance of $3.80 to $4.20 per share.

"Target's first quarter financial performance was better than our expectations, reflecting strong execution by our team as they delivered for our guests in a very choppy environment. After starting the quarter with very soft trends, we saw improvement later in the quarter, particularly in March," said Brian Cornell, chairman and CEO of Target. "We are in the early stage of a multi-year effort to position Target for profitable, consistent long-term growth, and while we are confident in our plans, we are facing multiple headwinds in the current landscape. As a result, we will continue to plan our business prudently while preparing our team to chase business when we have an opportunity."

The stock traded recently at $58.56, up 7.5 percent.

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Image: Mike Mozart, Flickr