By Chelsey Dulaney
Target Corp. offered a profit outlook for the current quarter
that falls mostly below Wall Street estimates, though the retailer
said its sales for the holiday quarter beat the upbeat projection
it gave last month.
Chief Executive Brian Cornell, who joined the company in August
and has since been engineering a turnaround at the retailer,
attributed the strong sales to strength in Target's style, baby,
kids and wellness segments.
"We're seeing early momentum in our efforts to transform Target,
and our team is entering the new fiscal year with a singular focus
on continuing to differentiate our merchandise assortment and
shopping experience while controlling costs by reducing complexity
and simplifying the way we work," said Mr. Cornell in a news
release.
In the latest quarter, which includes the key holiday shopping
season, sales at existing locations grew 3.8%, beating January's
boosted forecast of 3%.
For the current quarter, Target forecast per-share earnings of
95 cents to $1.05, mostly below with the estimate of $1.04 a share
from analysts polled by Thomson Reuters. Target said it will give
guidance for the year in March.
The company guided last month for stronger-than-expected
adjusted earnings and sales for the fourth quarter based on its
performance through November and December. But it warned it would
book a $5.4 billion pretax charge as it unveiled plans to exit its
Canada business after just two years. The company said it couldn't
find a realistic scenario that would get the segment to
profitability by its goal of 2021.
The botched entry into a market that was hungry for Target's
products contributed to the company's decision to part ways with
Chief Executive Gregg Steinhafel last year. Mr. Cornell is still
piecing together his turnaround plan for the retailer.
Target's results in the latest period compare with a weak
performance over the 2013 holidays when its data breach hurt
results. Since that time, the company has overhauled its management
team and made other efforts, including lowering its free shipping
minimum this week, to draw in shoppers.
In all, for the quarter ended Jan. 31, Target posted a loss of
$2.64 billion, or $4.10 a share, compared with a profit of $520
million, or 81 cents a share, a year earlier. The results included
a charge of $5.59 a share related to the Canada exit. Earnings from
continuing operations, excluding one-time items, $1.50 a share.
The company's boosted projection from last month called fpr
$1.43 to $1.47 a share in earnings from continuing operations.
Gross margin widened to 28.5% from 27.6% as overall transactions
grew 3.2%.
Net sales grew 4.1% to $21.8 billion, just topping the $21.6
billion expected by analysts.
The company said sales at existing locations grew 3.8%, beating
January's boosted forecast of 3%.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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