Target posted a surprise quarterly profit increase and boosted its full-year forecast ahead of the crucial holiday shopping season. Fred Katayama reports.
Target surprised Wall Street by boosting its quarterly profit and beating its own target. Sales rose as the discount retailer sets its sights on beefing up its core categories like fashion and furniture under its new CEO. But Target still faces many challenges. Fewer shoppers visited its stores. To attract those shoppers, many of whom were scared off by the big data breach last year, it cut prices, and that cut into its profit margins. The number of transactions declined yet again. And it continues to bleed money in Canada, where its botched debut last year resulted in massive discounting to clear inventory. Target's positive surprise echoes that of its archrival, Wal-Mart, which also reported an increase in sales. Target is finally showing some signs of momentum as it goes into the crucial holiday shopping season. It raised its full year forecast. Stifel Nicolaus analyst David Schick said, "We continue to believe Target is an interesting situation where 2016 Street estimates may switch from migrating lower for years to migrating higher." Investors had been betting on a turnaround under Target's new CEO who was hired this summer, Brian Cornell. Target's stock has risen nearly 12 percent over the past month, and it added to those gains in early trading.