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Target Beats Earnings, Q2 Guidance High

Company’s Turnaround Plan Sends Target Shares High

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On Wednesday, Target was able to slightly beat analysts expectations with their most recent earnings report that showed a slowdown in the company’s failing sales and revenue which has been the issue of their investors for the past couple of quarters.

For the quarter, investors overall hoped for slightly lesser losses due to the company’s turnaround plans which is believed by the company to pay off in the long run.

Target’s shares rose on Wednesday after the company delivered a smaller-than-expected decline in their same store sales that were below what analysts are expecting. Compared to consensus estimates of a 3.6% in store sales, Target reported only a 1.3% decline.

The company’s net income also jumped to $681 million or $1.23 per share in the period that ended last April 28 compared to the previous year’s net income of $632 million at $1.05 per share.

Analysts initially forecasted that the company’s profits might decline by as much as 20% at 91 cents per share while Target’s revenue is set to slump by 3.6% to $15.62 billion. Target delivered smaller losses with their earnings falling only by 6% to $1.21 per share while their revenue only inched 1% lower to $16.01 billion.

The company also released a second quarter earnings guidance where Target announced that it expects a lower single-digit decline in their same-store sales for the quarter and has not changed its previous earnings guidance at around $3.80 to $4.20.

Among the challenges faced by the company during the period included the rising competition in their online platforms which was led by more and more physical retail stores closing. Just recently, Macy’s has been reported to have been shutting down stores at a much faster rate than expected while Sears is facing issues with its dwindling inventories which were caused by a cost and shipment cutting.

Shipping Battle With Competitors

In the midst of Target’s rising competition, the company is also facing pressure to level out its online business with its top competitors who continue to offer new and easier way of ordering online and receiving their products.

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Target announced during its earnings call that it will further expand its investment in its online operations as more and more shoppers opt for easier shopping experiences at shorter shipping periods which is being offered by Amazon and Wal-Mart who has recently been offering two-day shipping and lesser amounts needed for free shipping.

Target Shares

The positive earnings and guidance led to more investors buying Target shares earlier on Thursday with their stock rising by as much as 7.4% to $58.55 per share after Target’s upbeat quarter guidance and lower than expected sales decline.

For the rest of the year, the company expects a single-digit decline in their same store sales as Target slowly conducts its turnaround efforts that is set to benefit the company in the long run.

Target shares are currently up by 0.94% but has declined in the past four sessions coming from an overbought stock last week. The stock is now expected to turn into an upside due to the positive earnings report and the bright outlook that the company’s plans offered its investors. These includes more efforts and strategies to increase the company’s online presence as its online sales rose 22% in the recent quarter although it was slightly lower than the previous quarter’s 34% rise in online sales.

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