In the third quarter, Target delivered strong comparable store sales and earnings gains, as the company benefited from additional store and digital traffic, as well as gains in the home department.
Net earnings from continuing operations for the third quarter came in at $706 million, or $1.37 per diluted share, versus net earnings of $616 million, or $1.16 per diluted share, in the period a year before.
Adjusted for one-time charges, earnings per diluted share from continuing operations were $1.36 versus $1.09 in the year-previous quarter. Target topped a MarketBeat-published adjusted earnings per diluted share analyst consensus estimate of $1.18 for the period.
Comparable sales gained 4.5% in the quarter year over year based on a 2.8 point growth in stores and a 1.7 point contribution from digital sales. Comparable digital channel sales grew 31% versus the year-past period as same-day fulfillment services, including order pick up, Drive Up and Shipt, accounted for 80% of Target’s digital comparable sales growth, the company maintained. Third quarter comparable traffic grew 3.1%, driven by both in-store and online operations.
Target posted sales of $18.41 billion, up 4.7% from the year-earlier quarter. Total revenue also gained 4.7% to $18.67 billion year over year. Operating income was $1 billion compared with $819 million in the period a year prior.
In a conference call, Target CEO Brian Cornell emphasized the traffic gains and the strength of order pickup and drive up services— which reduced costs associated with e-commerce fulfillment and helped boost digital sales growth— as contributing to the strength of the results.
In home, Target enjoyed a low single digit comp increase, with the kitchen and home storage segments leading.
Cornell also pointed out that Target’s new loyalty program, which launched nationwide in October, already has 35 million members, which should give fourth quarter sales a lift. Over an 18-month test period, he noted, shoppers enrolled in the Target Circle loyalty program spend 2% to 5% more than shoppers who weren’t in the program.