Key Takeaways:
Target Corp. (TGT) reported first-quarter results that topped Wall Street estimates and raised its full-year sales outlook, as a strategy of price cuts and improved delivery options showed early signs of winning back shoppers.
"Despite our updated guidance, we're maintaining a cautious outlook, given the work we know we have in front of us, and ongoing uncertainty in the macroeconomic environment," new CEO Michael Fiddelke said on a call with the media.
Shares of the Minneapolis-based retailer rose around 1% in pre-market trading. Target doubled its annual sales growth forecast to 4% from a prior target of 2% and said it expects adjusted earnings per share at the upper end of its $7.50 to $8.50 range.
Fiddelke, who took over in February, is spearheading a turnaround plan that includes spending an extra $2 billion on well-stocked merchandise and faster deliveries. The company also cut prices on approximately 3,000 common items in March to better compete with rivals like Walmart (WMT) and Amazon (AMZN).
The strategy helped drive an 8.9% surge in digital sales, aided by a 27% increase in same-day deliveries through its Circle 360 membership program. The company saw sales growth across all six of its main merchandising categories, a significant improvement from declines in five of those categories a year ago.
Still, analysts note the company's long-term challenge. "Target sits in a middle ground of retail - not the cheapest, not the go-to place for any one thing," Morningstar analyst Brett Husslein said.
The stronger outlook from Target suggests consumer spending remains resilient. The guidance increase signals management's confidence that its turnaround strategy can continue to gain traction against its main competitors. Investors will watch results from retail bellwether Walmart, which reports on Thursday.
This article is for informational purposes only and does not constitute investment advice.
