Although it missed Wall Street analyst estimates, Target enjoyed significant comparable sales and income growth in the third quarter, posting net earnings from continuing operations of $616 million, or $1.16 per diluted share.
In the year-previous period, as adjusted to reflect new accounting standards Target put into operation as 2018 began, net earnings from continuing operations were $476 million, or 87 cents per diluted share. A MarketBeat-published analyst consensus estimate called for adjusted net earnings from continuing operations of $1.11.
Comparable sales increased 5.1% in the quarter year over year, with traffic up 5.3% and average transaction amount down 0.2%. Comparable digital channel sales grew 49% versus the period a year earlier, and contributed 1.9 percentage points of the overall comp.
Total revenue increased 5.6% to $17.82 billion from the quarter a year previous, when sales were $17.59 billion. Operating income was $819 million versus $847 million in the year-prior period, as cost of sales and SG&A increased. Target noted that digital fulfillment and inventory costs in this-year’s quarter versus last year’s period impacted results, as did labor-related investments, offset to a degree by factors such as merchant initiatives and cost disciplines.
“Our team delivered another outstanding quarter, driving comparable traffic and sales growth of more than 5%, and earnings per share growth of more than 20%,” said Brian Cornell, Target chairman and CEO. “We’ve made significant investments in our team heading into the holidays, and they are ready to serve our guests with a comprehensive suite of convenient delivery and pickup options, a wide range of new products and unique gift ideas and a strong emphasis on low prices and great value. We plan to leverage our current momentum into 2019, when we’ll achieve greater scale across the full slate of our initiatives, creating efficiencies and cost-savings, further strengthening our guest experience, and positioning Target for profitable growth in the years ahead.”