Target raised its annual profit outlook as the discounter's efforts to spruce up fashions and other merchandise are resonating with shoppers.
Target raised its annual profit outlook as the discounter’s efforts to spruce up fashions and other merchandise are resonating with shoppers.
The rosier forecast, delivered Wednesday, comes as the discount-store chain more than tripled its net income in the second quarter.
Target’s shares rose more than 4 percent in pre-market trading.
The results are the latest evidence that the turnaround spearheaded by CEO Brian Cornell, who has led the company for the past year, is gaining traction.
Cornell succeeded Gregg Steinhafel whose abrupt departure in May 2014 capped a tumultuous year for the company. It was hurt by a massive credit-card breach before Christmas 2013 that sent shoppers temporarily fleeing. The company also botched a major expansion into Canada.
Cornell has been aiming to reinvent Target as a more nimble force amid fierce competition.
The company is investing in e-commerce and expanding Target’s small-format stores. It’s also trying to reclaim its position as the place to go for ”cheap chic.”
Target is placing heavy emphasis on fashion, children’s goods as well as products for the home, and it’s bringing more organic, natural, gluten-free and locally produced food to its grocery aisles.
Earlier this year, Target closed its money-losing business in Canada.
Cornell is also reshaping his management team. On Monday, Target said it was promoting its Chief Financial Officer John Mulligan to the newly created role of chief operating officer. Mulligan will assume oversight of stores, supply chain and properties. Succeeding Mulligan as chief financial officer is Cathy Smith, a seasoned retail executive. The changes are effective Sept. 1.
Target’s second-quarter results are benefiting from Cornell’s moves.
The company said second-quarter earnings were $753 million, or $1.18 per share for the three month period ended Aug. 1. That compares with $234 million, or 37 cents per share a year ago.
Adjusted earnings were $1.22, above Target’s range of $1.04 to $1.14 per share.
Target says revenue at stores open at least a year rose 2.4 percent, in line with expectations. The company said that figure rose three times that rate for fashion, baby, kids and wellness items, areas the company is emphasizing in its turnaround efforts.
The company now believes that it will earn $4.60 to $4.75 per share for the full year. That’s up from its prior projection of $4.50 to $4.65 per share.
Target’s shares rose $3.50 to $83.80 in premarket trading on Wednesday.