Target Investors to Focus on Investment Gains -- Earnings Preview
August 15 2017 - 6:29AM
Dow Jones News
By Khadeeja Safdar
Target Corp. is scheduled to report fiscal second-quarter
results before the market opens on Wednesday. Here's what you need
to know:
EARNINGS FORECAST: Analysts polled by FactSet expect adjusted
earnings of $1.19 a share, compared with $1.07 a share a year
earlier.
REVENUE FORECAST: Target is expected to report revenue of $16.25
billion, roughly flat from $16.17 billion a year ago.
WHAT TO WATCH:
STORE TRAFFIC: Target raised its sales outlook last month,
saying it now expects an uptick in foot traffic to provide a modest
increase in sales at its stores open at least a year. Several other
retailers, including Macy's Inc. and Kohl's Corp., have reported
improved traffic in the summer months, but investors will be
looking to see whether Target's investments in its stores and house
brands are resulting in market-share gains.
GROCERIES: Amazon.com Inc.'s deal to buy Whole Foods Market Inc.
puts renewed focus on Target's grocery business, which has had
declining sales despite efforts to improve the assortment of foods
it sells. Last year, Target was in advanced talks to acquire
Sprouts Farmers Market Inc., a Phoenix-based chain of about 250
grocery stores, but it eventually walked away from the deal. On
Monday, Target said it has hired executives from Wal-Mart Stores
Inc. and General Mills Inc. to accelerate its food-and-beverage
strategy, after naming Kroger Co. veteran Jeff Burt to lead the
division earlier this year.
E-COMMERCE INVESTMENTS: Target has worked on its e-commerce
capabilities, particularly as competition with Amazon and Wal-Mart
continues to heat up online. It has revamped some digital projects
and cut ties with partners in favor of developing its own programs.
On Monday, the company said it is working on a test for same-day
delivery and will acquire logistics software company, Grand
Junction, potentially giving Target more ways to deliver online
orders.
ONLINE MARGINS: The shift to e-commerce often comes at higher
costs for brick-and-mortar retailers like Target as they adjust to
shipping, customer-acquisition and technology expenses. Target
investors are looking to see whether the company can grow its
online sales profitably, unlike many online upstarts that operate
at a loss. Target has been testing a service in which customers
could fill a box with merchandise, then receive it within two days
for flat fee, and earlier this year it increased its free shipping
minimum on web orders to $35 from $25. Both changes are aimed at
improving online margins by encouraging customers to place bigger
orders.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
August 15, 2017 06:14 ET (10:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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