Target Q1 Adj. EPS Miss Estimates, But Revenues Top

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Retailer Target Corp. (TGT) reported Wednesday a sharp 64 percent drop in profit for the first quarter, reflecting the impact of rapidly-evolving shopping patterns and significant investments in response to the COVID-19 pandemic. Adjusted net earnings for the quarter missed analysts' expectations, while revenues topped it.

Net earnings for the first quarter plunged to $284 million or $0.56 per share from $795 million or $1.53 per share in the prior-year quarter.

Excluding items, adjusted net earnings for the quarter was $0.59 per share, compared to last year's $1.53 per share.

Total revenue for the quarter grew 11.3 percent to $19.61 billion from $17.63 billion in the same quarter last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.68 per share on revenues of $19.00 billion for the quarter. Analysts' estimates typically exclude special items.

Sales grew 11.3 percent to $19.37 billion, and other revenue increased 7.7 percent to $244 million from last year.

Comparable sales increased 10.8 percent, driven by a 12.5 percent increase in average basket, as guests made fewer, bigger shopping trips.

Store comparable sales increased 0.9 percent. Digital comparable sales grew 141 percent, accounting for 9.9 percentage points of Target's comparable sales growth.

Looking ahead, the company did not provide second-quarter or updated full-year guidance as a result of continued uncertainty.

The company had withdrawn its first quarter and full-year 2020 guidance on March 25 given the unusually wide range of potential outcomes as a result of the highly fluid and uncertain outlook for consumer shopping patterns and government policies related to COVID-19.

The company had also announced that it had suspended share repurchase activity as a result of the current environment and the company's commitment to maintain its strong investment-grade credit ratings.

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