Target delivered better than expected earnings during the critical holiday period, as the reseller's internal brands and easy delivery options had the strongest traffic and same store growth for more than a decade.
Here's what Target reported for the fourth quarter quarter ended February 2 c Earnings per share, adjusted: $ 1.53 vs. $ 1.52 expected
Immediately, net revenue fell by 26.5 percent to $ 799 million, or $ 1.52 per share, in the fourth quarter of last year completed February 2, from $ 1.1 billion or 1.99 $ per share for about the same time the year before, which included a minor week. Revenue was about $ 23 billion.
Sales at target stores open for at least 12 months were up 5.3 percent, with sales of brick and mortar store increasing 2.9 percent, while net sales increased by 31 percent. This was better than expected growth of 5.1 per cent. The company said e-commerce activities contributed 2.4 percentage points to total sales in the same store in the quarter.
For the year, the same store sales totaled 5 percent, the strongest growth since 2005. Target sales of e-commerce climbed 36 percent in 2018.
The number of transactions in Target increased by 5.3 percent in the fourth quarter, compared to growth of 3.6 per cent a year ago. And the average transaction amount increased 0.8 percent, better than the growth of 0.4 percent last year. Traffic was up 4.5 percent.
Looking for fiscal policy 2019, Target says it expects a low-to-middle-digit increase in the same store sales, and a mid-digit increase in net income. It asks for adjusted earnings of between $ 5.75 and $ 6.05 per share. Analysts had expected earnings per share of $ 5.61.
The quarterly results of the target indicate that investments in store buildings and delivery services are paying off. The department store continues to struggle and other malls such as Gap and Charlotte Russe have closed stores across the country.
Big box dealers Target and Walmart have mostly been immune to the same sales slips that other companies face. Walmart increased its e-commerce by 43 percent in the fourth quarter.
Target had been working to gain market shares from now liquidated Babies R Us and Toys R Us, a strategy that succeeded in the fourth quarter. But selling a higher volume of baby goods and toys did not help improve the company's bottom line as much as these items sell to lower profit margins.
Target's recent digital initiatives, save makeovers and private brand development, coupled with "a continued healthy consumer backdrop" and favorable weather in the spring, contributed well to continued same store growth, said Gordon Haskett analyst Chuck Grom ahead of Tuesday's report.
To be competitive, Target has invested in expanding more brands internally. It will soon launch three new underwear and sleepwear brands to rival Victoria's Secret. It continues to ink deals with popular fashion lines to collaborate on exclusive merchandise to be sold in Target stores; The latter is with Vineyard Vines.
Target is also becoming more competitive with Amazon. It begins inviting selected specialty brands and national retailers to sell on its website via a third-party market, called "Target +." The company says it hopes this approach will help ease the pressure on profit margins as it will be able to transfer shipping costs and other expenses to incoming third-party sellers.
Target is expected to provide more information on its full-year accounts for 2019 at a meeting with analysts in New York later on Tuesday morning.