Third Quarter Results At Target A Mixed Bag
As Target headed into the holiday season, the retailer reported mixed results for the third quarter as increases in foot traffic did little to boost store comparable stores.
For the quarter ending November 2, company-wide revenue increased 1.1% to $25.7 billion, reflecting a total sales increase of 0.9% and an 11.5% increase in other revenue. Operating income was $1.2 billion, down 11.2% from the comparable quarter the previous year.
Comparable sales were up 0.3% in the quarter, reflecting a comparable store sales decline of 1.9% and a comparable digital sales increase of 10.8%.
According to Target, the number of transactions in the quarter grew 2.4% but the average transaction amount was down 2%.
A report from Placer.ai showed foot traffic at Target in the third quarter increased 1%, nearly equal to that of Walmart, which had quarterly foot traffic growth of 0.9%. The two, however, were outplaced by the clubs as Costco, BJ’s Wholesale, and Sam’s Club had third quarter foot traffic growth of 7.2%, 5.9%, and 5.2% respectively, according to Placer.ai.
"I'm proud of our team's efforts to navigate through a volatile operating environment during the third quarter,” said Brian Cornell, chair and chief executive officer at Target. “Looking ahead, our team is energized and ready to deliver the unique combination of newness and value that holiday shoppers can only find at Target, and we remain confident in the underlying strength and fundamentals of our business, and our ability to deliver on our longer-term financial goals."
While Cornell pointed to some positives in the quarter, such as growth in store traffic and digital traffic, he said the retailer also encountered some unique challenges and cost pressures that impacted the company’s bottom-line performance.
Target officials said its strategic investments in growth initiatives of approximately $3 billion remain on track. In the third quarter, the retailer opened 13 new stores, its 11th sortation center located in Detroit, and invested in dozens of stores. Additionally, the company is improving the speed of its fulfillment services and is now offering shoppers the ability to navigate to a store for a curbside order through Apple CarPlay.
