TGT Target Corp

By Cara Lombardo 

Customers spent more at Target Corp. in its most recent quarter, as the retailer embarked on a three-year, $7 billion plan to refresh its interiors and cut prices.

Target posted a 1.3% rise in same-store sales, driven by increased digital sales and a modest gain in foot traffic. That is an improvement from a 1.1% decline a year ago and slightly better than analysts expected.

The Minneapolis-based retailer also raised its fiscal year outlook and now expects an adjusted profit of $4.34 to $4.54 a share, up from its previous expectation of $3.80 to $4.20 a share.

The results sent shares up 4.9% in premarket trading Wednesday. The stock is down nearly 25% so far this year.

Target has been launching exclusive brands and sprucing up its stores in an effort to keep customers from being wooed away by Wal-Mart Stores Inc., which has lowered prices, and Amazon.com Inc., which benefits as more types of shopping move online.

Amazon's plan to purchase Whole Foods Market Inc. increased the pressure on Target to improve its lagging grocery business, especially because the two companies are chasing many of the same customers. Target announced earlier this week that is testing a same-day delivery program in New York and plans to buy a logistics-software company, which could give it more ways to deliver online orders.

It is also piloting a program in Minneapolis that lets customers fill a box with home items such as laundry detergent and breakfast cereal for a flat fee, which is similar to a current Amazon offering.

Target Chief Executive Brian Cornell said in prepared remarks that while the recent sales boost is encouraging, the company is forging ahead with major changes that will "build an even better Target that will thrive in this new era of retail."

The company expects similar same-store sales growth in the second half of its fiscal year as the first half. It also expects a third-quarter adjusted profit of 75 to 95 cents a share.

Overall, Target reported a profit of $672 million, or $1.22 a share, compared with $680 million, or $1.16 a share, a year earlier. Excluding items, the company earned $1.23 a share, unchanged from a year ago. Analysts polled by Thomson Reuters had expected adjusted earnings of $1.19 a share.

Write to Cara Lombardo at cara.lombardo@wsj.com

(END) Dow Jones Newswires

August 16, 2017 07:44 ET (11:44 GMT)

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