MINNEAPOLIS, United States — Target Corp.’s online sales push paid off in the first quarter, even as profit missed forecasts and the retailer said performance will improve further in the current period.
Digital revenue rose 28 percent in the period ended May 5, the company said Wednesday. That contributed to a 3 percent lift in same-store sales, beating analysts’ average prediction, according to Consensus Metrix. Still, Target reported earnings of $1.32 a share in the period. That compared with an average analyst estimate of $1.39.
Shares were down 4.8 percent in pre-market trading as of 6:39am, after rising nearly 16 percent this year through Tuesday’s close.
Target chief executive Brian Cornell has made e-commerce a key part of his $7 billion turnaround plan, and earlier this month slashed some next-day delivery fees nearly in half to lure customers away from Amazon.com Inc. and Walmart Inc. The company’s also adding voice-activated shopping through Google’s home assistant and bringing same-day delivery to most major US markets in time for holiday shopping. As with other retailers, though, the cost of that expansion has crimped Target’s profitability.
“We expect Target’s second quarter comparable sales growth will move into the low to mid single-digit range,” Cornell said in a statement, affirming full-year guidance.
Target’s resiliency followed a similar performance from Macy’s Inc., which raised its full-year earnings outlook last week thanks to first-quarter sales that blew past analysts’ estimates. Bigger after-tax paychecks have helped stoke consumer demand, and April apparel sales — a key category for Target — jumped the most since March of last year, according to Commerce Department figures.
By Matthew Boyle; Editors: Crayton Harrison, Anne Riley Moffat.