Shares of Target Corp. (TGT) surged 9.7% in premarket trading on Wednesday, reaching a two-month high, following the announcement of their fiscal third-quarter profit, which exceeded expectations. Target reported a net income of $971 million, or $2.10 per share, for the quarter ending on October 28th. This is a significant increase from the $712 million, or $1.54 per share, recorded during the same period last year. With adjusted earnings per share of $2.10, excluding nonrecurring items, Target surpassed the FactSet consensus of $1.47.
Net Sales Fall Short
Although Target’s net income saw a substantial boost, their net sales fell short of expectations. Sales for the quarter decreased by 4.3% to $25.004 billion, below the projected $25.285 billion according to FactSet consensus. However, on a positive note, same-store sales experienced a smaller decline than anticipated. Comparable sales dropped by 4.9%, beating predictions of a 5.3% decrease.
Factors Impacting Performance
Target attributed the decline in sales to weakness in discretionary categories, which offset the continued strength in “frequency” categories, particularly in beauty products.
For the fourth quarter, Target expects adjusted earnings per share in a range of $1.90 to $2.60. This forecast is surrounding the current FactSet consensus of $2.23.
Target’s stock has seen a decline of 11.4% over the past three months leading up to Tuesday. In comparison, shares of rival Walmart Inc. (WMT) have increased by 5.3%, while the S&P 500 (SPX) has gained 1.3%.