Shares of Target Corp. (NYSE:TGT) are poised to take off Tuesday after the discount retailer lifted its short and long term guidance on the strength of better-than-expected holiday sales in the fourth quarter and newly instated tax rules in the US.
Shares were up more than 2% in premarket action to $68.75, near a 52-week high.
The company now expects adjusted earnings per share of between US$1.30 and US$1.40 in its fiscal fourth quarter ended Jan. 28, up from a prior range of US$1.05 to US$1.25 per share. The increase reflects a US$0.06 to US$0.08 benefit due to recently enacted tax reforms in the U.S.
The raised guidance is a far cry from November's warning that results for the period would be dampened by "highly competitive" holiday sales.
READ: Target dips after warning of not-so-rosy holiday sales despite market beating third quarter
"We are very pleased with our holiday season performance, which reflects the progress we've made against our strategy throughout the year," said Target CEO Brian Cornell in a statement.
Same-store sales on the upswing
Same-store sales in the quarter are expected to grow about 3.4%, which the company said translates to a growth rate of just over 1% for full-year 2017.
The Minneapolis-based retailer now expects adjusted EPS of US$4.64 to US$4.74 for full-year 2017, above the previous expectation of US$4.40 to US$4.60.
The company also said it expects to see same-store sales increase in the low single digits for fiscal 2018, excluding potential benefits from the U.S. tax reform.
Target is expected to report earnings on March 6.