Target topped first-quarter earnings estimates after refining its product lineup, a sign chief executive officer Brian Cornell is getting the retail chain back on track following years of missteps.
Excluding some items, earnings amounted to $1.10 a share in the period, which ended 2 May, the Minneapolis-based company said today in a statement. Analysts had predicted $1.02 on average, according to data compiled by Bloomberg.
Cornell, a former PepsiCo executive who took the reins at Target last August, has been sprucing up US stores after abandoning the chain’s money-losing Canadian operations in January. He’s also enticing shoppers with exclusive merchandise, such as the Lilly Pulitzer collection, and getting them to spend more when they visit stores. Health items and kids products sold especially well last quarter, the company said.
The goal is to use its unique lineup to get back Target’s former cachet, from the time when it was called “Tar-zhay” with a mock French accent, said Brian Yarbrough, an analyst at Edward Jones in St. Louis.
“That’s the place Target can differentiate itself from Wal-Mart and Amazon,” he said. “That will get them back to the old days.”
In January, Target announced it was walking away from Canada less than two years after opening stores there. Dismantling operations in the Canadian division, which employed 17,600 people, led to a $5.1 billion writedown in the fourth quarter. The Canada unit had amassed more than $2 billion in operating losses since 2011.
Target also suffered a data breach during the holiday season of 2013, and the fallout has extended until this year. Last month, the company agreed to pay banks $19 million for costs they incurred in the attack. Since the fourth quarter of 2013, Target has reported $166 million in expenses related to the breach.
The company resumed stock buybacks last quarter for the first time since 2013. It repurchased $562 million in shares in the period. Target also raised its annual earnings forecast to $4.50 to $4.65 a share, excluding some items, up from $4.45 to $4.65 previously.
Bloomberg News, edited by ESM
