Target sees same-store sales rise 1.9 percent during holidays

MINNEAPOLIS -- Target Corp. managed to avoid some of the holiday doldrums that dragged down some other retailers with fourth-quarter results that surpassed many of its competitors.

Same-store sales grew 1.9 percent, at the high end of the company's forecast, Target said Wednesday. And online sales regained momentum with a 34 percent increase in the period, faster than the 20 percent growth seen in the third quarter.

The Minneapolis-based retailer earned $1.4 billion, or $2.32 a diluted share, in the three months ended Jan. 30. That's a turnaround from a loss of $2.6 billion, or $4.14 a share, in the same period a year ago when it took a sizable charge for shutting down its Canadian stores.

Adjusted for one-time charges and gains, Target earned $1.52 a share, in line with the company's forecast but shy of analysts' expectations of $1.54 a share.

Revenue was $21.6 billion, down slightly from $21.8 billion, a drop Target said came partly because of the sale of its pharmacy and clinic business to CVS.

Executives forecast slight growth in first-quarter and annual per-share earnings for 2016. Target shares rose nearly 2 percent in early trading.

Sean Naughton, an analyst with Piper Jaffray, said in an early report this morning gross margins were a bit below expectations, likely due to the growth in online sales, promotions, and warmer-than-usual winter weather. Still, he said Target's results were impressive "especially in light of the results we have heard from other competitors."

During the holidays, Target worked to gain more online sales by offering free shipping on any size order. That promotion seemed to resonate with customers, helping contribute to a sizable increase in online sales. In a conference call with reporters, Chief Financial Officer Cathy Smith said that Target's 34 percent growth in online sales led the industry.

And while other retailers saw a dip in apparel sales during the holidays due to the warmer weather, she said Target did not see a similar drop, a fact that she attributed to the retailer's work in the last year to improve the quality and style of its offerings. Toys were another bright spot in the quarter with double digit growth, boosted by Star Wars merchandise.

"With traffic growing for five consecutive quarters and our signature categories of style, baby, kids and wellness leading our growth, Target's results demonstrate that we are focused on the right strategic priorities," chief executive Brian Cornell said in a statement.

Last week, Wal-Mart reported same-store sales in the U.S. rose 0.6 percent in its fourth quarter.

This story was originally published February 24, 2016 at 5:04 PM with the headline "Target sees same-store sales rise 1.9 percent during holidays ."