Target's CEO Touts Strong Q3 And Early Signs Of Optimism For Q4

Shares of Target Corporation TGT were trading lower by more than 8 percent after the company's third quarter earnings beat was overshadowed by a concerning fourth quarter guidance.

What You Need To Know

Target's third quarter performance was "solid" based on an increase in traffic and same-stores sales along with a 24 percent growth digital sales, Target CEO Brian Cornell said during a CNBC interview. From this, investors should conclude that various initiatives, including exclusive brands, remodeled stores and smaller store formats are resonating well with consumers.

Why It's Important

Despite a strong performance in the third quarter, Target's fourth quarter guidance implies a same-store sales growth of flat to positive 2 percent, Cornell said. This would be consistent with what was seen throughout the full year, although a 0.9 percent boost in total same-stores sales was around double what the Street had expected in the quarter.

However, the vast majority of the same-store sales growth in the quarter came from mobile initiatives which may not bode well with many shareholders as online accounts for a small fraction of the total business.

"Our stores really enable our digital growth and I love the fact that some days our guests are in stores," he said. "And our stores, 1,400 of them, are shipping from our stores to our guests so there is a great balance between what we do in our stores and how that enables our digital fulfillment."

What's Next?

Target's newest exclusive brand, "Hearth & Hand" is already helping boost traffic and it's "off to a great start" although it's still early to reach any conclusions ahead of the all important holiday season.

The stock traded around $55.19 at time of publication.

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Image Credit: Mjs92984 (Own work) [CC BY-SA 4.0], via Wikimedia Commons