This Is Big News for TGT Stock
Target Corporation (NYSE:TGT) announced that it had successfully completed its start to “Black Friday” with record sales on its web site, Target.com, and strong store traffic. TGT stock has reflected the retailer’s strong performance with a higher share price, which rose to $73.70 on Monday, November 30, also known as “Cyber Monday.”
Target stock benefited directly from some good old-fashioned music entertainment sales, driven by a resurging music department, enjoying the effects of the tidal wave created by Adele’s new album and the success of its “10 Days of Deals” campaign. Target started its Black Friday sale early, with its first deals available November 22, offering online and in-store deals on electronics, toys, and apparel. (Source: “Target to start Black Friday deals 5 days early,” Reuters, November 9, 2015.)
Target stock has benefited from the company’s realization that early promotions do not interfere with Black Friday; rather, they encourage customers to make more shopping trips, as noted by Tina Tyler, Target’s chief stores officer, during a media conference call. (Source: Ibid.)
Target Sales Struggle to Meet Demand During Thanksgiving Weekend
Owners of Target stock may also want to thank Apple, because some of the department store chain’s most successful sales during the recent Thanksgiving retail extravaganza were in its “iPad” stock. Apple’s famous tablet sold at a rate of one unit per second during Black Friday at Target alone. The “Apple Watch” also sold at a brisk pace. (Source: “Apple iPad, Apple Watch, and Beats Headphones ranked as highest selling products at Target on this Thanksgiving,” Tech News Today, November 30, 2015.)
Nevertheless, Thanksgiving is the gateway to Christmas and what would Christmas be without toys? In fact, Target was selling Lego, Barbie, Disney Princess, and Hasbro’s Star Wars toys all at a brisk pace.
Overall, Target Corp. accomplished what it needed to after suffering some pressure on margins and lower-than-expected online sales targets, which brought down Target stock more than five percent on Wall Street after the third quarter (ended November 1). Nevertheless, even if online sales did not match analysts’ or their own 30% growth expectations, Target’s sales still managed to increase 20% during the third quarter.
Target to See Online and In-Store Sales Growth in 2016
Last March, Target announced it wanted to achieve an annual 40% growth in online sales. Target expects that its Internet sales will grow by 20% in the fourth quarter; if Black Friday and Cyber Monday’s performances are any indication, the company should be on track to achieve this, which will help boost Target’s stock.
Target management attributed last quarter’s slowdown in sales to an over 10% drop in electronic sales, a product line that Target had “targeted” for heavy promotion in 2015. The other reasons that pushed Target’s stock down were a lower gross margin (nine basis points lower compared to last year’s, due to the closure of some pharmaceutical operations, which it sold to CVS Health), and investments in its own brands.
Target is the fourth largest U.S. retail distributor. It has engaged in a recovery strategy throughout 2015 and noted that sales growth of its flagship products, such as articles for children and wellness and health products, came in 2.5 times more than average in the third quarter, a trend that the Black Friday sales have confirmed. (Source: “Target’s online sales growth slows; margins pressured,” The Globe & Mail, November 18, 2015.)
In its latest quarterly presentation, Target raised the lower end of the range of its forecast for its yearly earnings per share (EPS), excluding special items, to between $4.65 and $4.75, up slightly from $4.60–$4.75. Target’s stock has dropped nearly four percent since the beginning of 2015; however, the fact that Target said its number of same-store sales rose 1.9%, higher than consensus estimates, points to a much better 2016, making TGT stock a bargain at its current price.