The Atlanta Journal-Constitution
TARGET OFFERS SOLID PROFIT OUTLOOK DESPITE VIRUS
What happened
Target Corp. offered a solid annual profit outlook Tuesday and said it hasn’t seen anything related to the coronavirus so far that would affect its financial targets. The outlook came as the discounter reported strong fourth-quarter profits, though its sales were weighed down by weak demand for toys and electronics during the holiday shopping season.
Target joins other retailers with disappointing sales during the shortest holiday shopping period since 2013. Walmart had a rare sales shortfall, while Macy’s and J.C. Penney saw sales decline in the fourth quarter. Kohl’s posted disappointing holiday sales but on Tuesday reported that fourthquarter earnings and revenue beat Wall Street expectations.
Why it matters
Retailers already dealing with higher costs from an ongoing trade war with China struggled to get potential shoppers through the doors sooner, and the start of 2020 doesn’t appear to be offering much relief. A new virus has spread beyond China after disrupting supply chains there and is now hampering operations in the United States. However, discounters like Target should benefit in the short term as shoppers stock up on essentials like hand sanitizers, canned food and cases of water to prepare themselves if the virus spreads.
Financial results
Target delivered net earnings of $834 million, or $1.65 per share, for the three-month period ended Feb. 1. That compares with $799 million, or $1.52 per share, in the year-ago period. Revenue rose 1.8% to $23.13 billion. Analysts were expecting $1.65 per share on revenue of $23.44 billion, according to FactSet.
Comparable sales — or sales in stores open at least a year — rose 1.5%. That included online sales growth of 20% in the period — its 11th consecutive quarter of growth in comparable sales, a key metric of a retailer’s health.
At Kohl’s, sales at stores opened at least a year were unchanged in the quarter compared to a year ago.