Tuesday's Market Minute: Target Misses Earnings Bullseye

Target Corporation TGT reported outpacing fourth quarter earnings expectations on Tuesday. On an adjusted basis, earnings per share came in at $1.69 vs. $1.66 consensus and revenue was $23.40 billion vs. $23.50 billion expected, according to Zack’s estimates. Same-store sales growth was in-line at 1.5%, following 11 consecutive quarters of growth at stores opened just last year. The big box retailer reported that in fourth quarter ending on Feb. 1, net income grew to $834 million, up from $799 million.

The company has invested in its stores and growing its e-commerce business, and was arguably considered one of the retail “winners” of 2019. In the race to last-mile delivery between Amazon.com, Inc. AMZN, Target, and Walmart Inc WMT, TGT has been a clear winner. It said same-day services were a major driver in its fiscal fourth quarter. Same-day pick-up in store, drive-up and same-day delivery through Shipt was a bright spot for the company.

Shipt is a platform Target has partnered with that allows one-day delivery on orders $35 or more for a flat rate of $9.99, or unlimited orders for $99 per year. Target reported that these same-day services accounted for more than 80% of its comparable digital sales growth during this period. It is also notable to remember Target reported weaker-than-expected holiday sales for the November and December shopping period. A company spokesperson back in January explained strong sales in apparel, beauty, food, and beverage lead to fewer bargain deals for post-holiday shoppers. This reportedly led to higher profits but fewer sales for the big box retailer.

Target CEO Brian Cornell said in an earnings news release, “The strategic investments we’ve made over the past several years to elevate the shopping experience, curate our multi-category assortment at scale, and deliver ease and convenience through our fulfillment capabilities are deepening our relationship with our guest.” In the first quarter of fiscal 2020, Target is guiding $1.55 to $1.75 for earnings per share and same-store sales to grow in the low single digits – slightly below the street’s expectations going forward. Target shares have gained nearly 50% in the last 12 months, and are trading near yesterday’s close ahead of the Wall Street open.

Pics by Mike Mozart of TheToyChannel and JeepersMedia on YouTube