Target (TGT) has managed to report improved comparable-store sales (or comps) in the past three quarters, as the company’s turnaround plans have begun to yield results. During the last reported quarter, Target’s comps increased 3.6%, reflecting higher traffic. Meanwhile, transaction size also improved. However, its comps growth rate remained low.
In comparison, rival Costco (COST) continues to put up stellar results and is generating an industry-leading comps growth rate. Costco’s comps in the US increased 7.1% during the last reported quarter, reflecting strong traffic and higher transaction size. Meanwhile, Walmart’s (WMT) US segment saw a 2.6% improvement in comps.
Factors driving Target’s comps
Target’s comps are benefitting from its strong e-commerce sales, which contributed about 1.8% to its comps growth rate during fiscal 4Q17. Meanwhile, the company’s differentiated product offerings through its focus on merchandising and launch of exclusive “only-at-target” brands further supported its sales growth rate. Notably, the company’s exclusive brands remain popular among customers and are generating healthy sales.
Moreover, Target’s price investments, its accelerated pace of store remodeling, multiple delivery options for online orders, and the opening of small-format stores are expected to contribute meaningfully to its top-line growth rate.
Going forward, Target is expected to sustain its sales growth momentum as the company is gaining market share in its core merchandising categories. The company’s management projects a low-single-digit improvement in comps for fiscal 2018.