Target Surges After Stronger Back-to-School Season Fuels Results

NEW YORK, United States — Target Corp. jumped as much as 10 percent in early trading after a strong back-to-school season fuelled third-quarter earnings, stoking optimism for the retailer as it heads into the holidays.

Profit in the quarter was $1.04 a share in the period, excluding some items, the Minneapolis-based company said in a statement Wednesday. Analysts had estimated 83 cents on average, according to data complied by Bloomberg.

The numbers signal that Target is rebounding from an unexpected drop off in traffic in the previous quarter. Chief Executive Officer Brian Cornell has had a challenging year of fighting competitors on two fronts, with e-commerce rivals and grocery competitors chipping away at Target’s business. Though same-store sales fell 0.2 percent in the most recent quarter, that was better than the 1.1 percent decline predicted by analysts.

The results “reflect meaningful improvement in our traffic and sales trends and much stronger-than-expected profitability,” Cornell said in the statement.

Target also raised its annual earnings forecast to $5.10 to $5.30 a share, excluding some items. It had ranged from $4.80 to $5.20. The outlook was helped by the early retirement of debt and a tax benefit, the company said.

Shares of the retail chain rallied as high as $78.68 in premarket trading. The stock had been down 1.6 percent this year through Tuesday’s close.

‘Difficult’ Environment

Target had lowered its annual earnings forecast last quarter, blaming a “difficult retail environment.” While the chain has seen strong growth in clothing, kids products and home decor, Cornell has said it can do better in areas that drive regular traffic: household essentials, grocery and pharmacy items.

Cornell is now striking a more optimistic tone as the company heads into the holiday season.

“We are pleased with our inventory position and confident that our team will deliver a great guest experience as they bring our merchandising and marketing plans to life,” he said.

By Shannon Pettypiece; editors: Nick Turner & Mark Schoifet.