Target’s Holiday Boost Brightens Q4 Outlook
Target Corp.’s holiday sales were significantly better than expected, leading the retailer to raise its fourth-quarter and full-year guidance for its 2017 fiscal year.
The Minneapolis-based retailer’s comparable-store sales grew 3.4 percent for the November/December period, well above the expected range of 0 percent to 2 percent. Sales across all of Target’s core merchandise categories, including food and beverage, were positive and accelerated during Q3, reflecting strong traffic growth, positive store comps and continued strength in digital sales.
Target now expects that 2017 will be the fourth consecutive year in which its digital sales grow more than 25 percent. Stores fulfilled 70 percent of Target's digital volume in November/December, meaning that stores enabled about 80 percent of the company's comparable-sales growth in that period.
"We are very pleased with our holiday season performance, which reflects the progress we've made against our strategy throughout the year," said Brian Cornell, Target’s chairman and CEO. "We've positioned our stores at the center of a continually expanding suite of convenient fulfillment options and made significant investments in our team, which enabled our stores to fulfill 70 percent of all digital orders in the November/December period. As we look ahead to 2018, we will build on the foundation we established this year by launching additional exclusive brands, enhancing our digital capabilities, opening approximately 30 small-format stores and tripling the size of our remodel program to more than 325 stores. We will also remain focused on rapidly scaling up new fulfillment options, including same-day delivery, which will be enabled by our acquisition of Shipt, and our recently launched Drive Up service."
Target now expects Q4 comparable-sales growth in a range of around 3.4 percent and full-year 2017 growth of more than 1 percent. The company is currently planning for a low single-digit increase in its 2018 comparable sales and year-over-year stability in EPS generated by its core business, excluding the benefit from recently enacted federal tax reform.
Combined with the impact of a 53rd week in the 2017 fiscal year, Target's total sales are expected to grow more than 9 percent in the fourth quarter.
Target operates 1,834 stores across the United States.