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Target Raises Q4, FY17 Adj. Earnings Outlook - Quick Facts

Discount-store operator Target Corp. (TGT) on Tuesday reported that its comparable sales for the combined November/December period rose more than expected. In addition, the company raised its adjusted earnings outlook for the fourth quarter as well as fiscal 2017.

Target said that its comparable sales in the combined November/December period grew 3.4 percent, compared with the expected range of 0 percent to 2 percent.

Comparable sales across all of the company's core merchandise categories - Home, Apparel, Food & Beverage, Hardlines and Essentials - were positive and accelerated from the third quarter, reflecting strong traffic growth, positive store comps and continued strength in digital sales.

For the fourth quarter of 2017, Target now expects adjusted earnings of $1.30 to $1.40 per share, up from the prior range of $1.05 to $1.25 per share.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $1.22 per share for the quarter. Analysts' estimates typically exclude special items.

The revised outlook reflects a 6 to 8 cent benefit from a lower structural tax rate in January resulting from recently-enacted federal tax reform legislation.

The company expects fourth-quarter reported earnings per share from continuing operations to be higher than adjusted earnings per share, reflecting an expected benefit driven primarily by a one-time change in Target's net deferred tax liabilities resulting from federal tax reform legislation.

Target now expects fourth-quarter comparable sales growth in a range of around 3.4 percent, consistent with the results in the November/December period. This would translate into full-year 2017 comparable sales growth of just over 1 percent.

Combined with the impact of a 53rd week in the 2017 fiscal year, Target's total sales are expected to grow more than 9 percent in the fourth quarter.

For full-year 2017, Target now forecasts adjusted earnings per share of $4.64 to $4.74, compared with prior outlook range of $4.40 to $4.60 per share. Full-year reported earnings per share from continuing operations is expected to be higher than adjusted earnings per share. The Street expects earnings of $4.56 per share for the year.

Looking ahead to fiscal 2018, Target said it is currently planning for a low single-digit increase in its 2018 comparable sales and year-over-year stability in earnings per share generated by its core business, excluding the benefit of federal tax reform.

For fiscal 2018, Target projects reported earnings per share from continuing operations and adjusted earnings per share of $5.15 to $5.45. Analysts expect the company to earn $4.37 per share.

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