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Target settings The largest sales increase of 13 years



Target


TGT 5.68%

said the same retail trade was the fastest rate for more than a decade, driven by efforts to improve its stores and e-commerce opportunities as well as a thriving economy that helped lift sales over retail.

Comparable sales on the company increased by 6.5% in the fourth quarter of August from the previous year, corresponding to Target's strongest quarterly earnings since 2005. Total revenue rose 6.9% to $ 1

7.78 billion.

CEO Brian Cornell said the results reflect more than just a favorable retail environment that points to market shares across a range of categories from electronics and home goods to toys and clothes. "Our progress so far has gone well before our original expectations," he said at a conference call Wednesday.

The shares in the company increased by 6.4% in the pre-market trade after increasing its full-year forecast.

A robust US economy asks more people to open their wallets, which gives rise to dealers from Home Depot Inc. to Nordstrom Inc. Earlier this month,

Walmart
Inc.

said that quarterly revenue grew fastest for over a decade. Some retailers have also picked up market shares from competitors like

J.C. Penney
Co.

and toys "R" Us Inc. that have closed places.

The company has said that it expects margins to improve during the second half. Margins declined in the last quarter, partly due to higher digital follow-up costs, but Target said that part of that pressure was moderated by efforts to reduce costs and restore prices and campaigns.

Proof of Targets long-term profitability comes when the company is no longer receiving an increase from a favorable economy, according to Sucharita Kodali, retail analyst at Forrester Research. "The cost of doing business as a reseller is all the costs you had before and then some," she said. "The biggest challenge is to continue growing in a retail environment that is fundamentally stable."

Mr. Cornell also raised Target's concerns about tariffs and US worsened relations with global trading partners, who "could hurt economic growth and vitality in the United States," he said.

Target said its menu of exclusive brands and new store patterns contributed to the company attracting more shoppers to its stores, increasing comparable sales of only 5% in the second quarter.

Comparable digital sales increased 41%, boosted by a day sales in July, which was intended to help Target test their systems before the holiday season. The target for the mentioned customers has also utilized new services, including purchases and delivery on the same day.

Two years ago, it fought the Minneapolis-based chain to keep track of competitors like

Amazon.com
Inc.,

who have benefited from the shopping online shopping, and Walmart, which had rebuilt stores and lowered prices. At the beginning of 2017, Cornell announced a bill of billions of dollars to help the company catch up.

Target has since tightened its pricing strategy, redesigned stores, introduced exclusive products and updated its supply chain and technology. It has also acquired Shipt Inc. grocery store and opened smaller stores in towns and colleges.

Target said that investments in improving freshness and presentation of the food category contributed to more market share and that retailers would make a big deal during the holiday to get a share from the latest closures at Toys "R" Us and Babies "R "Us.

This was Target's fifth straight quarter of increasing sales in the same store. The retailer said it expects sales in the same store during the third quarter and the rest of 2018 to be "in line with" comparable sales growth so far this year, which Target said has been 4.8%. The company said it expects revenue from remaining operations to be between $ 1 per share and $ 1.20 per share in the third quarter.

Target expects the result from continuing operations to be between $ 5.30 and $ 5.50 per share. Target had guided results between $ 5.15 a share and $ 5.45 per share.

For the quarter recently ended, earnings rose 19% to $ 799 million, or $ 1.49 per share, up from $ 671 million or $ 1.22 per share for the comparable quarter a year earlier.

Adjusted, profit was $ 1.47 per share, up from $ 1.22 per share. Analysts expected an adjusted earnings of $ 1.40 per share.

Write to Khadeeja Safar at [email protected]


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