Retailer Target (TGT) has reported third-quarter financial results that beat Wall Street expectations and provided a strong forecast for this year’s holiday sales.
The company reported earnings per share (EPS) of $2.10 U.S. versus $1.48 U.S. that was expected in Q3 of this year.
Revenue in the period came in at $25.40 billion U.S. compared to $25.24 billion U.S. that was forecast.
Target said its results got a lift from greater purchases in categories such as food and beauty, which offset weaker spending by consumers overall.
The company also saw a 14% reduction in inventories and related costs, as well as lower freight, supply-chain, and delivery expenses during Q3. Gross margins rose to 27.4% from 24.7% a year earlier.
But for the second straight quarter, Target’s comparable sales declined as consumers continue to focus on buying necessities with interest rates elevated.
In the third quarter, Target’s comparable sales fell nearly 5% year-over-year as customers bought fewer discretionary items. Digital sales declined by 6% compared with a year ago.
However, the Minneapolis-based company is optimistic about holiday sales this year as it is already seeing shoppers hit stores and websites to buy decorations, gifts, and other items.
The big-box retailer expects earnings of $1.90 U.S. to $2.60 U.S. per share in the current fourth quarter of the year. The midpoint of that range is higher than the $2.22 U.S. per share expected by analysts.
Target’s website is already full of Black Friday deals. To further boost sales during the holidays, Target is offering exclusive merchandise, including thousands of items under $25 U.S. each.
The stock of Target has declined 27% this year to trade at $110.79 U.S. per share.