Target Sees 4Q Beat Despite Dreary December

Despite stumbling in the crucial month of December, discount retailer Target (NYSE:TGT) relieved shareholders on Thursday by saying it expects to meet or beat the conservative end of its fourth-quarter earnings outlook.

Shares of Minneapolis-based Target rallied about 3% on the profit guidance, which comes a day after a cautious analyst note kept the shares from participating in a 300-point surge on Wall Street.

Target said its same-store sales were essentially flat in December due to “softness” during the first three weeks of the month. Wall Street had been anticipating slight growth of about 0.8% for last month.

Net retail sales increased 0.8% in December at Target to $10.1 billion.

Still, the retail giant eased jitters by saying it expects fourth-quarter EPS to meet or “somewhat exceed” the low end of its prior forecast, which would top expectations.

After reporting third-quarter results, Target projected EPS of $1.45 to $1.55 and non-GAAP EPS of $1.64 to $1.74. By comparison, Wall Street has been forecasting non-GAAP EPS of $1.50.

“Similar to November, profitability for December benefited from our continued focus on achieving an appropriate balance between price investments and driving sales, combined with thoughtful inventory management,” CEO Gregg Steinhafel said in a statement.

Looking ahead, Target anticipates growing January same-store sales in the low-single digit percentage range after sales stalled in December.

Wall Street cheered the news, driving Target up 2.86% to $60.50 ahead of Thursday’s opening bell. The stock has rallied 15% over the past 12 months, but retreated on Wednesday after Jefferies (NYSE:JEF) downgraded it to “hold” from “buy” and slashed its price target to $59 from $74.