WMT Walmart Inc

By Joshua Jamerson 

Target Corp. raised its outlook for same-store sales over the holiday season as the retailer reported better-than-expected results in the latest period, helped by higher online sales and back-to-school shopping.

Target has been struggling to find an e-commerce strategy to compete with Wal-Mart Stores Inc. and Amazon.com Inc. Digital growth had decelerated for two consecutive quarters, slowing to 16% during the second quarter, but picked up to 26% in the three months ended in October.

For the period that ended in October, Chief Executive Brian Cornell said the company saw improved traffic and sales trends, helped by higher market share and "unexpectedly" strong back-to-school performance. Same-store sales edged 0.2% lower in the latest quarter, the second consecutive decline, but were at the higher-end of the company's projection that same-store sales would be flat to down 2%.

For the year, Target now expects adjusted per-share earnings in a range of $5.10 to $5.30, compared with prior guidance of $4.80 to $5.20. The difference between the ranges reflects early debt-retirement losses and a small benefit from the resolution of income tax matters, the company said. However, the guidance boost is still below Target's original full-year earnings forecast of $5.20 to $5.40 a share.

The results come as Target has been trying to fix its grocery business, which generates about $18.5 billion in annual sales for the retailer. The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a boon to shoppers at the checkout line but a financial strain on farmers and grocery stores. The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar.

Over all for the October quarter, Target earned $608 million, or $1.06 a share, up from $549 million, or 87 cents a share, a year earlier.

Excluding special items, per-share profit rose to $1.04 from 86 cents. The company guided for earnings in a range of 75 cents to 95 cents a share on an adjusted basis.

Sales fell 6.7% to $16.44 billion from $17.61 billion a year ago, reflecting the sale of its pharmacy business to CVS Health Corp. last year. Analysts expected $16.3 billion in the latest period.

For the fourth quarter the company boosted its same-store sales guidance to a range of down 1% to up 1%, compared with its prior guidance for down 2% to flat.

Target said it expects to earn an adjusted $1.55 to $1.75 a share, compared with the $1.60 analysts have expected, according to Thomson Reuters.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

November 16, 2016 07:26 ET (12:26 GMT)

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