In a beat of its own expectations, Target Corp. reported that its comparable sales in the November/December holiday period grew 3.4%, compared with the expected range of 0 to 2%.
Comps advanced across what Target designates as its core merchandise categories: Home, Apparel, Food & Beverage, Hardlines and Essentials. Comp gains in the core categories accelerated from the third quarter, Target stated, reflecting strong traffic growth, positive store comps and continued strength in digital sales. Target noted that it expects 2017 will be the fourth consecutive year in which its digital sales grow more than 25%.
Target maintained that it anticipates that fourth quarter comparable sales growth will come in at about 3.4%, consistent with the November/December results. As such, the fourth quarter numbers would contribute to full-year 2017 comp growth of just over 1%. Target expects new and non-mature stores to contribute about 70 basis points to fourth quarter sales growth. Combined with the impact of a 53rd week in the 2017 fiscal year, Target’s total fourth quarter sales should grow more than 9%, the company indicated.
For fourth quarter 2017, Target anticipates adjusted earnings per share coming in at $1.30 to $1.40 versus its prior expectation of $1.05 to $1.25, which includes a six to eight cent benefit from a lower structural tax rate in January resulting from recently-enacted federal tax reform legislation. For full-year 2017, the company now expects adjusted EPS of $4.64 to $4.74 versus prior guidance of $4.40 to $4.60.
“We are very pleased with our holiday season performance, which reflects the progress we’ve made against our strategy throughout the year,” said Brian Cornell, Target chairman and CEO. “We’ve positioned our stores at the center of a continually expanding suite of convenient fulfillment options and made significant investments in our team, which enabled our stores to fulfill 70% of all digital orders in the November/December period. As we look ahead to 2018, we will build on the foundation we established this year by launching additional exclusive brands, enhancing our digital capabilities, opening approximately 30 small-format stores and tripling the size of our remodel program to more than 325 stores. We will also remain focused on rapidly scaling up new fulfillment options including same day delivery, which will be enabled by our acquisition of Shipt, and our recently launched drive up service.”