Target Corp. is expected to report second-quarter financial results before the market opens on Wednesday that should offer insight into early sales for the back-to-school season, the second-largest shopping period behind the winter holidays.
WHAT TO WATCH FOR: Investors will be dissecting any comments on early sales for back-to-school merchandise and more broadly about the overall economy. They’ll also want to hear more details on Target’s new marketing plans to get shoppers in the stores during the final months of the year.
Like most retailers, Target has had the challenge of trying to find ways of luring cautious U.S. shoppers into stores in a sluggish economy that has them scrutinizing every purchase. The job and housing markets are still shaky, but falling gas prices have been a bright spot.
Target, which mixes stylish clothes and trendy decor under the same roof as toothpaste and cereal, has drawn customers into stores with two growth initiatives. It has been offering a larger selection of foods and a program it started in 2010 that gives shoppers a 5 percent discount when they pay with Target-branded credit and debit cards. Investors will want an update.
The discounter also is creating mini shops of Apple Inc. products in 25 of its stores this year.
Target announced last month that it teamed up with luxury merchant Neiman Marcus to offer a limited collection spanning from fashion to sporting goods for the winter holidays. More than 50 products from 24 designers, including Oscar de la Renta and Diane von Furstenberg, as well as younger designers such as Derek Lam, will be available at both stores and on their websites starting Dec. 1 until they sell out. Items in the collection will cost from $7.99 to $499.99, but most will sell for less than $60.
Target also is preparing to expand into Canada next year, its first expansion outside the U.S. It’s poised to begin opening the first of between 125 and 135 stores in Canada at former Zellers locations acquired from Hudson’s Bay Co.
Earlier this month, Target reported a 3.1 percent gain in revenue at stores opened at least a year for July. The increase was great than the 2.7 percent increase Wall Street predicted. Revenue at stores opened at least a year is a key gauge of a retailer’s health because it excludes results from stores recently opened or closed.
For the second quarter, the metric also rose 3.1 percent.
WHY IT MATTERS; Target’s size, its sweep across American consumer markets and its broad offerings make it a barometer of consumer spending, which is an important part of the U.S. economy.
WHAT’S EXPECTED: For the second quarter, analysts on average expect Target to report 99 cents per share on revenue of $16.76 billion, according to FactSet.
LAST YEAR’S QUARTER: A year ago, Target earned $1.03 per share on revenue of $16.22 billion.