Target Corp. said holiday sales were strong both in its stores and online, as the retailer was boosted by healthy U.S. consumer spending as well as its own turnaround efforts.
Sales at stores open at least a year rose 3.4% during November and December, compared with a 1.3% decline in the same period last year when the chain struggled to attract shoppers to its stores and compete with Amazon.com Inc.
Continue Reading Below
Target's improvement follows a string of announcements from major chains, including Macy's Inc., J.C. Penney Co. and Kohl's Corp., all of which reported sales growth in the critical holiday months.
The positive results extended to Costco Wholesale Corp., which said sales growth continued at a strong pace in December.
Economists have predicted that low unemployment and rising wages gave consumers the confidence to spend this holiday season. Retailers had their best holiday sales since 2011, according to Mastercard SpendingPulse, which tracks payments in stores and online.
Chief Executive Brian Cornell said physical stores played an important part of fulfilling digital orders during the holiday season.
He highlighted toys like L.O.L. Surprise dolls and Barbie Dreamhouse as hot items during the season and said electronic sales continued to be driven by the Nintendo Switch and Apple products.
Shares of the retailer jumped 4.2% to $70 during premarket trading. Before Tuesday's announcement, the stock had been down 6% over the past 12 months.
Like other big-box chains, Target has been struggling to compete with Amazon, which is benefiting from the movement of consumer shopping online. After a weak holiday performance last year, the Minneapolis-based company embarked on a multibillion-dollar spending plan to improve its stores and digital capabilities.
Mr. Cornell has since invested in Target's supply chain, launched new brands, remodeled physical locations and lowered prices. The company recently agreed to acquire grocery-delivery startup Shipt Inc., moving to match services that have been rolled out by rivals Amazon and Wal-Mart Stores Inc.
Mr. Cornell also said in 2018 the company plans to open about 30 small-format stores and triple the size of its remodel program to more than 325 stores.
In the months leading up to the holiday period, Target took several steps to revamp its promotional strategy, cutting prices on thousands of items and streamlining the number of discounts it offers. For example, the company promoted weekend deals throughout the season in hopes of encouraging customers to visit stores on days they are more likely to make a trip.
Overall, the company said comparable-store sales, which includes its web business, are expected to rise 3.4% in the fiscal fourth quarter. In November, Target had projected quarterly comparable sales in the quarter would be flat to 2% higher than a year ago.
The company also raised its profit target for the fourth quarter, which it expects to report later in February. Target now expects adjusted earnings of $1.30 to $1.40 a share, compared with prior guidance of $1.05 to $1.25 a share.
Write to Khadeeja Safdar at firstname.lastname@example.org and Imani Moise at email@example.com
(END) Dow Jones Newswires
January 09, 2018 08:04 ET (13:04 GMT)