Source : Company reports

1Q16 RESULTS

Target reported adjusted 1Q16 EPS of $1.29 versus the consensus estimate of $1.19. Total revenues were $16.20 billion versus expectations of $16.31 billion, down 5.4% year over year, as comps were offset by the impact of the sale of the pharmacy business. Comps increased by 1.2% versus consensus of 1.7%. Store comps were up 0.6% and the digital channel contributed 0.6% to comps. Transactions increased by 0.3%, while the average transaction increased by 0.9% (selling price increased by 2.9% and units per transaction declined by 2.0%). Comps in the signature categories were up 3.6%, three times the rate of the overall comp. REDcard penetration was 23.4% versus 21.5% in the year-ago period. Inventories were up 4.3% year over year at the end of the quarter versus the 5.4% decline in sales during the period.

2016 OUTLOOK

2Q16 guidance calls for EPS of $1.00–$1.20 versus consensus of $1.36, based on flat–(2)% comp growth. Management’s view of 2Q16 has been tempered by the recent slowdown in consumer trends. Full-year EPS guidance is unchanged, at $5.20–$5.40. Despite the recent slowdown in consumer trends and the company’s tempered outlook for 2Q, management believes its prior projections for the full year are still achievable.