Dive Brief:
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Target Corp. Wednesday reported a nearly 52% profit increase in Q1, with $636 million in profit compared to $418 million a year ago. Revenue rose to $17.12 billion, up 3% in the first quarter. Earnings were $1.10 per share, up 70 cents year over year and handily beating expectations of $1.03 per share.
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In addition to a revamp of its merchandising efforts, the retailer has significantly cut costs, closing all Target stores in Canada and beginning plans announced in March to lay off some 1,700 employees and leave some 1,400 open jobs unfilled.
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The retailer raised its guidance for the year to $4.50 to $4.65 per share from its previous expectations of $4.45 to $4.65 per share and said its expects Q2 earnings of between $1.04 to $1.14 per share.
Dive Insight:
Target Corp. appears to be swiftly regaining some of its old groove, thanks to assertive cost cutting (not including its raise of hourly worker pay to $9 per hour) and a revamp of its food and apparel merchandising. Digital sales also grew 38%, according to CEO Brian Cornell.
Its Lily Pulitzer limited-edition line, a return to the much-copied designer-collection approach it innovated several years ago, sold out in record time. And health and children’s products also sold well last quarter, according to the company.
“We like the initiatives Target has in place,” Piper Jaffray retail analyst Sean Naughton said in a pre-report note.
