Income Planned (TGT) for Q3 2021

Target shares fell early Wednesday morning as the company highlighted its focus on value on rising food, fuel and other commodity prices.

Shares fell about 3.5% premarket despite beating expectations for the third quarter.

Target CEO Brian Cornell said in a phone call to reporters that the large retailer is covering some of the higher costs rather than passing them on to customers. This strategy can reduce profitability.

“We are protecting prices,” he said. “This year is as important to our guests as being safe throughout the pandemic.”

The large box retailer beat analysts’ forecasts for its fiscal third quarter as sales jumped 13% as shoppers bought Halloween costumes, stocked up school supplies, and began looking for holiday gifts early.

He also raised his forecast for the fourth quarter, predicting that like-for-like sales could grow from single-digit to low-double digits during the holiday period. Previously, he estimated high growth, expressed in single digits.

Cornell said in a phone call to reporters that sales were strong throughout the year but were “intermittent at key seasonal times.” He said he expects this pattern to re-emerge during the holidays, when consumers buy toys, jewelry and food.

Here is what Target reported for the third fiscal quarter ended October 30, compared to the consensus estimates from Refinitiv:

  • Earnings per share: $ 3.03 (adjusted) vs. $ 2.83 expected.
  • Revenue: $ 25.65 billion vs. $ 24.78 billion

Net income jumped to $ 1.49 billion, or $ 3.04 a share, from $ 1.01 billion, or $ 2.01 a share, a year earlier. Excluding commodities, the retailer earned $ 3.03 per share, higher than the $ 2.83 per share expected by analysts surveyed by Refinitiv.

Total revenue rose 13% to $ 25.65 billion from the same period last year, slightly above analysts’ expectations of $ 24.78 billion.

LFL sales rose 12.7% in the third quarter as shoppers increased more frequent visits to Target stores and its website. This exceeded analysts’ expectations by 8.2%, according to research by StreetAccount.

LFL store sales increased 9.7% and LFL digital sales increased 29%. (Those numbers were up 9.9% and 155%, respectively, in the year-ago quarter.)

Target said that same-day sales through its services, including curbside pickup, Drive Up, order picking at a store called Order Pickup and Shipt home delivery service, rose nearly 60% in the quarter. This is in excess of 200% growth over the same period last year.

Cornell said the company is ready for the holidays. He said Target had been creative to ensure that goods arrived in stores and warehouses on time, despite clogged ports. It has contracted some of its own ships, offloaded about 60% of its containers during off-peak hours, and shipped more of its goods to less congested ports in Georgia, Virginia, or the Pacific Northwest.

According to him, this led to an increase in inventories by almost 20% or $ 2 billion a year compared to last year.

Target launched its first holiday offerings in early October and has promised to match early bird prices. He said the company is ramping up its operations by hiring 100,000 seasonal employees, filling 30,000 new positions in the supply chain and committing about 5 million additional hours to its current workforce.

“The holiday season is getting off to a great start, but we have many weeks ahead of us and we think we will continue to see this power throughout the holiday season right up to Christmas Eve,” Cornell said.

Target shares are up about 51% this year as of late Tuesday. The shares closed at $ 266.39 on Tuesday, bringing the retailer’s market value to $ 130.01 billion.

Read the company’s press release here.

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