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Minneapolis-based Target Corp. reported a jump in earnings of nearly 20 percent for the first quarter of its 2015 fiscal year as the discount retailer continues its post-data breach rebuilding efforts and plots a course away from packaged foods and toward more fresh products on the grocery side.
Adjusted earnings for Q1 were up 19.6 percent over a year ago, to $1.10 per share, beating estimates. Total Q1 sales increase 2.8 percent to $17.1 billion over a year ago, with comparable-store sales at its 1,795 locations up 2.3 percent, driven by growth in transactions and basket size -- a bright spot in the wake of Target's ill-fated Canadian venture that saw the retailer's total pullout from the north-of-the-border market.
Meanwhile, Target's digital channel sales increased 37.8 percent, contributing 0.8 percentage points to comparable sales growth. Comparable sales in signature categories (style, baby, kids and wellness) grew more than double the company average.
And, for the first time since Q2 2013, Target returned cash through share repurchase, with $895 million being paid to shareholders in the first quarter, more than 140 percent of net income.
“We’re pleased with our first quarter traffic and sales, particularly in our signature categories, which drove better-than-expected profitability through improved gross margin and continued expense management,” said Brian Cornell, Target's chairman and CEO. “We’re encouraged to see early progress on our strategic priorities, including strong sales growth in apparel, home and beauty, nearly 40 percent growth in digital sales, and positive traffic in both our stores and digital channels. We continue to benefit from strong execution by our stores team, who overcame weather challenges and West Coast port delays to deliver outstanding guest service in the first quarter.”
On the grocery side, Cornell is reportedly leading the charge to drive Target toward a greater emphasis on fresh foods, with packaged goods being featured and promoted to a lesser extent.