Target Corporation (NYSE:TGT) shares soared around 14% in pre-market trading after the company reported third-quarter earnings that beat forecasts, reflecting fewer markdowns and better inventory management.
The big box retailer said third-quarter GAAP and adjusted EPS of $2.10 was 36% higher than a year ago, and above the high end of the company's guidance range, reflecting disciplined inventory and expense management.
Third-quarter comparable sales fell 4.9% in line with expectations with declines in discretionary categories partially offset by continued growth in frequency categories, most notably in Beauty.
Inventory at the end of the quarter was 14% lower than last year, reflecting a 19% reduction in discretionary category inventory.
Brian Cornell, chair and chief executive, said it continued to be a “very challenging external environment.”
“While third-quarter sales were consistent with our expectations, earnings per share came in far ahead of our forecast. This profit performance benefited from our team's commitment to efficiency and disciplined inventory management.”
For the fourth quarter, Target expects comparable sales in a wide range around a mid-single digit decline, and GAAP and adjusted EPS of $1.90 to $2.60.
Total revenue in the third quarter was $25.4 billion, down 4.2 % from last year with net earnings of $971 million, up 36%.