Targets Posts Lower Profit, Forecasts Moderate Holiday Sales Growth
November 15 2017 - 8:55AM
Dow Jones News
By Khadeeja Safdar
Target Corp. posted higher quarterly sales but profits fell and
the retailer gave a disappointing earnings outlook for the holiday
period, as the big-box chain spends heavily to revamp stores, lower
prices and raise wages.
The company said sales at stores open at least a year increased
0.9% in the quarter ended Oct. 28, compared with a 0.2% decline in
the same period last year. It forecast earnings for the holiday
quarter of $1.05 to $1.25 a share, though the range is lower than
what Wall Street was expecting.
Shares of the retailer fell more than 3% in premarket trading
following the report. The stock is down 16% on the year as
investors worry about competition from Wal-Mart Stores Inc. and
Amazon.com Inc., which are pushing down prices.
"While we expect the fourth-quarter environment to be highly
competitive, we are very confident in our holiday season plans,"
CEO Brian Cornell said in a news release.
Despite higher third-quarter sales, both in stores and online,
Target's profits fell 21% to $480 million, or 88 cents a share, in
the three months ended Oct. 28. The company's profit margins
declined and expenses rose as it remodeled stores and invested in
lower prices.
Target expects comparable sales growth in the holiday period of
flat to 2%, translating into growth of flat to 1% for the full
year.
The company also expects higher compensation costs driven by
investments in store employee hours and wage increases. Earlier
this year, Target said it was increasing its hourly minimum wage to
$11 this year and it planned to hire 100,000 temporary workers over
the holiday period -- a 40% increase from last year.
Target said it remodeled 37 stores in the third quarter and 110
stores in the year. Sales have increased 2% to 4% in those recently
renovated stores. The company plans to finish remodeling 1,000
stores out of its 1,800 fleet by 2020.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
November 15, 2017 08:40 ET (13:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Walmart (NYSE:WMT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Walmart (NYSE:WMT)
Historical Stock Chart
From Sep 2023 to Sep 2024