NEW YORK (AP) — Target delivered another strong quarter, overcoming a slew of challenges from inflationary pressures to congested ports.
Third-quarter profits rose nearly 47%, while sales increased 13.2%, both exceeding expectations and the Minneapolis company raised projections for fourth-quarter comparable store sales.
Target joins Walmart heading into the holiday shopping season with momentum. The biggest U.S. retailers are rerouting goods to less congested ports, even chartering their own vessels. Target also said it unloaded about 60% of its containers at off-peak times Target and Walmart are using their scale to keep prices comparatively low and perhaps most importantly, keeping its shelves full when so much is in short supply.
On Wednesday, Target said that inventory levels rose 20% compared with the same period last year.
However, Target is not unscathed by soaring costs.
It's quarterly operating income margin rate during the quarter was 7.8%, up from 8.5% last year. Its gross margin rate was 28%, also up from last year's 30.6%. The company cited higher merchandise and freight costs, on top of rising supply chain costs.
Before the opening bell Wednesday, shares of Target Corp. fell 3%
Sales at stores that have been open for at least a year rose 9.7% in the three-month period that ended Oct. 30. That was on top of a 9.9% growth in the same 2020 span. Target reported double-digit sales growth across all five of its key merchandise categories including food and clothing.
Online comparable sales jumped 29% compared with a blistering 155% increase a year ago before vaccines against COVID-19 became available and many Americans steered clear of indoor spaces.
Net income rose to $1.49 billion, or $3.04 per share, from $1.01 billion, or $2.01 per share, last year. Adjusted earnings per share for the recent quarter was $3.03, far exceeding the $2.82 per share Wall Street had been expecting, according to a survey by FactSet.
Sales reached $25.29 billion in the quarter, topping last year's $22.34 billion and also the projections of industry analysts.
Target CEO Brian Cornell told reporters Tuesday that Americans have been shopping throughout the year.
The company now expects that same-store sales for the fourth quarter will be up in the high single digit to low double-digit percentage range, up from the previous guidance for a high-single digit increase.
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