Target Corp posted quarterly sales and profit that were higher than had been expected as several turnaround initiatives, including the revamping of stores and more promotions, have paid off.
Shares of Target were up 8.4% in Wednesday premarket trading, bringing much needed cheer to the U.S. retail industry, which has been hit hard by weaker than expected performances from department stores.
In February, Target announced it would be undertaking aggressive activities related to promotions, revamp its stores and invest in technology and new brands to combat increased competition from Amazon.com and Walmart.
One analyst said that Target has started to show an improvement in inventory, general tidiness as well as experience in the cash register area.
Target’s sales in stores that were opened a minimum of one year were down 1.3%, but that was better than the expected decline of 3.6% by analysts.
The company announced that those sales were down due the number of customer visits dropping and as consumers purchased fewer items per visit.
That was offset partially by an increase in the demand for electronics and swimwear as well as products that had been created in collaboration with different celebrities like Victoria Beckham.
The war of prices amongst big-box retailers in the U.S. has continued to intensify with Walmart and Aldi, a Germany based grocery chain, taking actions like frequently changing prices and by forcing their suppliers to lower prices.
Net income at Target was up, ending the quarter at $681 million equal to $1.23 a share compared to $632 million equal to $1.05 a share for the same period one year ago.
Target posted a charge of $261 million related to early retirement of some debt during the period one year previously.
Excluding certain items, Target profit reached $1.21 a share.
Overall revenue was down 1.1% ending the quarter at just over $16 billion.
On average, analysts were expecting per share earnings of 91 cents with revenue reaching $15.61 billion.
Target has said as well that the higher than had been expected performance during its first quarter increased the likelihood that its results for the full year would be above the midpoint of its forecast released previously.
Previously it forecasted a decline in the low-single digits in its comparable sales. At the same time, it posted that it expected adjusted earnings per share of between $3.80 and $4.20 for its year that ends January 2018.