Target Lifts Earnings Outlook

Target Corp. on Wednesday lifted its profit outlook for the year after posting stronger-than-expected earnings in its second quarter and its fourth straight quarter of same-store sales growth.

The company now expects earnings of $4.60 to $4.75, compared with its prior guidance of $4.50 to $4.65 a share.

Target's results have been improving under Chief Executive Brian Cornell, who took the helm of the big box chain a year go. The company has exited its struggling Canada business, reshuffled its executive team, and been pushing digital sales.

"While the momentum in our financial results is encouraging, we have much more to accomplish, "Mr. Cornell said in a news release. "Looking ahead, we are focused on making further progress against our strategic priorities and are committed to improving operations as we move through the important back-to-school, back-to-college and holiday seasons."

For the current quarter, Target forecast earnings of 79 cents to 89 cents a share. Analysts polled by Thomson Reuters had forecast 86 cents a share.

In the latest quarter, sales excluding newly opened and closed locations rose 2.4%, helped by strength in its style, baby, kids and wellness categories. Consensus Metrix had forecast 2.2% growth.

In all for the quarter, earnings from continuing operations doubled to $1.21 a share from 61 cents a share a year earlier. Excluding one-time items, earnings were $1.22 a share.

Target had forecast per-share earnings of $1.04 to $1.14, while analysts polled by Thomson Reuters were looking for $1.11 a share.

Total sales grew 2.8% to $17.4 billion, in line with analysts' expectations, according to Thomson Reuters.

Digital sales grew 30%.

Target booked $20 million in after-tax losses in the quarter related to exiting its Canada business

The company earlier this week announced two major changes to its management team, naming Chief Financial Officer John Mulligan to the newly created chief operating officer role and hiring Cathy Smith, former finance chief at Express Scripts Holding Co., as CFO.

On Tuesday, Target reached an agreement with Visa Inc. that will reimburse card issuers as much as $67 million for costs incurred by its data breach during the 2013 holiday shopping season and said it is working on a similar pact with MasterCard Inc.

Target's results came after Wal-Mart Stores Inc. executives warned Tuesday that profits will miss their goals this year, an admission that the world's largest retailer is spending heavily to generate even modest sales growth.

Write to Chelsey Dulaney at [e-mail]

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August 19, 2015 08:25 ET (12:25 GMT)

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