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What Target’s Holiday Hiring Indicates

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  • Target is set to hire 130,000 temporary employees for the holiday season.
  • Analysts expect the retailer to sustain sales and earnings growth momentum.

Target announced today that it plans to hire 130,000 temporary employees for the holiday season. This year’s numbers are about 10,000 higher than last year’s. It’s a general trend among retailers to hire seasonal employees to better serve customers during the busiest shopping period of the year. However, the number also indicates what the retailer is expecting from the holiday season.

Amid US-China trade war tensions, Target has raised its full-year earnings outlook. Meanwhile, it expects to sustain sales momentum during the vital holiday season. Target’s optimism stems from the strategic initiatives it’s taking to boost its sales. The expansion of its fulfillment options, its value pricing, and its compelling brands should drive traffic at its stores and on its website.

Meanwhile, macro factors such as low unemployment and a low tax rate coupled with higher wages could boost consumer spending and, in turn, retail sales.

Despite the positives, analyst Ike Boruchow of Wells Fargo warned that retail sales could be weaker than retailers expect. Weather-related issues, a shorter holiday calendar, and lower tourist spending are some of the factors analysts expect could cause weaker retail sales.

We expect Target to sustain momentum

Despite these obstacles, we expect Target to maintain the momentum in its sales. We believe that the retailer’s digital transformation will continue to drive traffic. Its same-day delivery services, value pricing, expanded assortments, and compelling brands are expected to support its comps growth.

Target is projecting 3.4% growth in its comps during the second half of 2019. The forecast looks solid, as Target will be up against tough comparisons. Target’s comps rose more than 5% in the same period last year.

Meanwhile, its bottom line is expected to benefit from higher comps and an improved mix. Target expects its adjusted EPS to be in the range of $5.90–$6.20, about $0.15 higher than its previous guidance.

Target’s impressive financial performance led the rally in its shares. Its stock is up 63.3% year-to-date as of September 9.

Besides Target, UPS announced that it would hire 100,000 seasonal employees. Amazon and Walmart have yet to announce their holiday hiring plans.

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