Target Corp on Wednesday reported a higher-than-expected quarterly profit and raised its fiscal-year forecast after benefiting from a strong back-to-school shopping season and higher online sales.
The Minneapolis-based retailer's shares were up more than 9 percent at $78.20 in premarket trading and are set to open at about a six-month high. At Tuesday's close, the stock was down nearly 2 percent year to date.
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Chief Executive Officer Brian Cornell said store visits increased and sales trends "meaningfully" improved during the third quarter ended on Oct. 29.
Digital sales increased 26 percent, an acceleration from previous quarters. Sales in high-margin "signature" categories such as baby and health and wellness outpaced total comparable sales by three percentage points.
"As we move into the biggest quarter of the year, we are pleased with our inventory position," Cornell said in a statement.
Target expects fiscal-year earnings of $5.10 to $5.30 per share, excluding special items, up from a prior outlook of $4.80 to $5.20. It also raised the forecast for its sales performance at stores open at least a year by one percentage point to a range of down 1 percent to up 1 percent for this quarter.
Net income attributable to Target rose to $608 million, or $1.06 per share, in the third quarter from $549 million, or 88 cents per share, a year earlier.
Excluding items that include the favorable resolution of income tax matters and the company's pharmacy transaction, earnings were $1.04 per share. Analysts on average were expecting 83 cents, according to Thomson Reuters I/B/E/S.
Total sales fell 6.7 percent to $16.4 billion. Same-store sales dipped 0.2 percent, while analysts on average had expected a decline 1.1 percent, according to research firm Consensus Metrix.
(Reporting by Nandita Bose in Chicago Editing by W Simon and Lisa Von Ahn)