Target topped profit estimates in its first quarter and raised the lower end of its full-year earnings forecast on Wednesday, as the retailer's efforts to revamp its offerings and image begin to pay off.
Under CEO Brian Cornell, Target has engineered a turnaround plan to cut costs, bolster grocery and style offerings and expand through new urban locations.
Same-store sales in the quarter increased 2.3%, helped by a 38% rise in digital channel sales and strong performance of Target's so-called signature categories like style, kids and wellness.
The company also boosted its full-year forecast, saying it now expects earnings per share of $4.50 to $4.65, compared with prior guidance of $4.45 to $4.65.
Overall profit was $635 million, or 98 cents per share, up from $418 million, or 66 cents per share, a year ago. Excluding items, earnings came in at $1.10, surpassing Wall Street estimates of $1.03 per share.
Target has begun to put costly missteps behind it that have been a drag on its bottom line. For instance, data breach-related expenses fell to $3 million in the quarter, down from $18 million a year ago and $166 million overall. It also had a mere $16 million in after-tax losses related to its decision to pull out of Canada after two years, down from $3.6 billion last quarter. The company closed the last of its 133 Canadian stores last month.
Target has also been axing jobs, mainly at its headquarters, in an effort to cut costs. In March, the retailer announced it had laid off 1,700 people and wouldn’t fill another 1,400 open jobs.
Total sales rose 2.8% to $17.1 billion, coming in slightly ahead of analyst estimates.
Shares rose about 1% to $78.95 in premarket trading and are up 4% this year.
