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Target Q1 Results Top Estimates; Now Sees FY EPS Above Midpoint Of View Range

Discount-store operator Target, Inc. (TGT) reported Wednesday higher net profit in its first quarter, while segment earnings and margins declined amid lower comparable sales. Adjusted earnings per share and sales, however, topped market estimates. Further, the company backed its fiscal 2017 forecast, adding that it will finish the year above the midpoint of its prior earnings guidance.

In pre-market activity on the NYSE, Target shares were gaining 7.66 percent to $58.70.

Brian Cornell, chairman and CEO of Target, said, “Target’s first quarter financial performance was better than our expectations, reflecting strong execution by our team as they delivered for our guests in a very choppy environment. After starting the quarter with very soft trends, we saw improvement later in the quarter, particularly in March.”

In the first quarter, net earnings increased 7.7 percent to $681 million from $632 million last year. Earnings per share climbed 17.1 percent to $1.23 from $1.05 a year ago, reflecting a 7.7 percent drop in share count.

Net earnings from continuing operations grew 10.4 percent to $677 million from $614 million last year. Earnings per share from continuing operations climbed 20 percent to $1.22 from $1.02 a year ago.

Adjusted earnings per share were $1.21, compared to $1.29 in 2016. On average, 24 analysts polled by Thomson Reuters expected earnings of $0.91 per share. Analysts’ estimates typically exclude special items.

Segment earnings before interest expense and income taxes or EBIT, Target’s measure of segment profit, were $1.18 billion, down 11 percent.

First-quarter EBITDA margin was 10.9 percent and EBIT margin was 7.4 percent, compared with last year’s 11.5 percent and 8.2 percent, respectively. Gross margin rate was 30.5 percent, compared with 30.9 percent in 2016, reflecting increased digital channel fulfillment costs.

Sales decreased 1.1 percent to $16.02 billion from $16.20 billion last year.

Analysts were looking for sales of $15.62 billion for the…

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