Target Q1 Comps Advance, Net Sales Slip

Target’s first quarter results reflected what the retailer called a volatile consumer environment and the impact of the sale of its pharmacy business, with comps gaining but overall net sales slipping.

For the first quarter ended April 30, Target Corp. posted net earnings of $632 million, or $1.05 per diluted share, versus $635 million, or 98 cents per diluted share, in the year-prior period. Net earnings from continuing operations were $614 million, or $1.02 per diluted share, versus $651 million, or $1.01 per diluted share, in the fiscal 2015 quarter while adjusted earnings per share from continuing operations were $1.29 versus $1.10 in the year-previous period.

Adjusted earnings per diluted share beat a Marketbeat-published analyst average estimate by a dime.

Comparable store sales advanced 1.2% as comp digital sales gained 23%, contributing 0.6 percentage points to overall comparable sales growth. First quarter sales slipped to $16.2 billion from $17.12 billion last year as the impact of the pharmacy and clinic business sales offset the comp gain.

Target maintained that the unadjusted earnings per share from continuing operations figure reflects $261 million of pre-tax early debt retirement losses, costs related to the sale of the pharmacy and clinic businesses to CVS Health and the resolution of income tax matters.

“We are pleased with our first quarter financial results, which demonstrate the effectiveness of our strategy in an increasingly volatile consumer environment,” said Brian Cornell, Target chairman and CEO. He added that the retailer’s focus product designations— style, baby, kids and wellness— performed well in the quarter.

“First quarter comparable sales in signature categories grew more than three times the company average, digital comparable sales grew 23%, and strong execution by our team delivered stronger-than-expected growth in adjusted EPS. With an outstanding team, a resilient business model and a strong balance sheet, we plan to successfully implement our long-term strategy, even in the face of a challenging short-term consumer landscape,” Cornell said.

Target operates 1,793 namesake stores across the United States as well as Target.com.