Reuters

(Reuters)

Solid Sales Growth Drives Target to 1Q Beat

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Target Corp (TGT) on Wednesday reported a larger-than-expected rise in quarterly profit, citing robust online sales and strong demand for products at the center of its growth plan.

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The fourth-largest U.S. retailer raised the low end of its fiscal-year outlook and said it repurchased $562 million worth of its shares in the quarter. This resumption of buybacks after nearly two years is the latest sign it had rebounded from a crippling data breach in late 2013.

Still, Chief Financial Officer John Mulligan said consumer sentiment remained "choppy" and that it was hard to say whether Target was taking market share from Wal-Mart Stores Inc <WMT.N>, which posted disappointing results on Tuesday.

Target shares were up 0.4 percent at $78.23 in morning trading.

Excluding restructuring costs and other items, earnings rose to $1.10 per share in the first quarter ended May 2 from 92 cents a year earlier.

Analysts on average expected $1.03 a share, according to Thomson Reuters I/B/E/S.

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Target said sales at stores open at least a year rose 2.3 percent, matching the market consensus, according to Consensus Metrix. One-third of the growth came from online sales, which jumped 38 percent.

Under Chief Executive Officer Brian Cornell, who took the job in August, Target has been promoting a narrower set of products that include apparel, items for children and babies, and the health and wellness category.

Mulligan said sales of those higher-margin "signature categories" were double the company average.

Since Target pulled out of the Canadian market earlier this year, "we are really seeing the benefit of being able to focus on our U.S. business," Mulligan said on a media call.

Target raised the low end of its full-year earnings outlook to $4.50 per share from $4.45 before special items while keeping the high end at $4.65.

In March, Cornell announced plans to cut $2 billion in costs. The restructuring included eliminating several thousand corporate jobs, a revamp of grocery operations and investments in technology and the supply chain.

Including restructuring costs, Target said first-quarter net earnings from continuing operations rose 14 percent to $651 million. Sales increased 2.8 percent to $17.12 billion.

(Reporting by Nathan Layne; Editing by Jeffrey Benkoe and Lisa Von Ahn)