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Target’s Holiday Sales Exceeded Expectations

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Target reported strong sales

Target’s (TGT) sales for the key holiday season exceeded expectations. It reported a 3.4% rise in comparable-store sales (or comps) for the combined November-December 2017 period compared to its earlier estimate of 0%–2% growth.

Target’s sales remained positive across all its core product categories, including Apparel, Home, Food & Beverage, Essentials, and Hardlines. The merchandise categories marked sequential improvement compared to fiscal 3Q17 results.

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Target’s value pricing, compelling promotions, and expanded offerings, including the launch of exclusive products and enhanced store services, helped it register higher store traffic and improved comps. Its digital sales continued to mark stellar growth, driven by an expanded range of products and convenient delivery options, including its Restock program and drive-up services.

The company stated earlier that it would leverage its strong store base to fulfill online orders, which supported its digital business during the holiday season. It fulfilled 70% of its online orders through its stores.

In comparison, other retailers and mass merchandisers also reported healthy comps growth during the holiday season. For instance, Costco (COST) continued with its industry-leading comps growth and registered 10.8% and 11.5% rises in comps in November and December 2017, respectively. The comps for Kohl’s (KSS), JCPenney (JCP), and Macy’s (M) also improved on a YoY (year-over-year) basis during the holiday period. Walmart (WMT), which hasn’t report its holiday sales yet, is also expected to report strong holiday sales, driven by its expanding e-commerce sales and rising store traffic.

Target raised guidance

Target raised its 4Q17 and 2017 sales guidance following its strong holiday sales. It now expects its fiscal 4Q17 comps to register growth of 3.4%, an increase from its earlier guidance of flat to 2% growth. For 2017, its comps are expected to rise more than 1%, an increase from its earlier expectation of flat to 1% growth. For fiscal 2018, it estimates a low single-digit rise in comps.

The company said that sales from its new stores are expected to add 70 basis points to its top-line growth rate. Its total sales are now estimated to register growth of 9% in fiscal 4Q17. Analysts expect total sales to increase 8.6% in fiscal 4Q17.

Target also expects its digital sales to grow more than 25%, which marks the fourth consecutive year in which its e-commerce sales have grown more than 25%.

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