Big-box retailer Target reported third quarter results that did not meet up to expectations on Wall Street, citing investments in supply chain weighed on profits.
Despite the miss, the company’s CEO Brian Cornell is still enthusiastic about consumer spending and has said there is “no sign” it would slow down ahead of the holidays. It was earlier this year that Cornell remarked on consumer spending as the best he had ever seen in his career.
“There is no indicator as we sit here today that the consumer environment is slowing as we enter the holiday season,” Cornell said.
For the third quarter however, Target reported earnings per share of $1.09 while analysts had expected $1.12. Revenue at $17.82 billion was higher than the $17.80 billion expected. Same store sales saw a growth of 5.1% while 5.2% was expected.
“While digital channel sales continue to grow rapidly, we are benefiting from the healthy traffic and sales growth in our stores as well,” Cornell remarked. “I will say that we are optimistic about our ability to deliver profitable growth next year and beyond.”
Chief Financial Officer Cathy Smith remarked on the earnings call, “While we are seeing some pressure on our operating income and gross margin rates from the brisk pace of digital growth and the investments we’re making to transform our business, we’re on track with our long range plans. By using our stores as hubs for delivery and pickup, we deliver faster to guests while reducing costs for fulfillment and last mile. We’re just now moving to scale and Q3 was a huge step in that direction.”
Disclaimer: We have no position in Target Corporation (NYSE: TGT) and have not been compensated for this article.