By Paul Ziobro
Target Corp. will report third-quarter financial results before
the market opens on Wednesday. Here is what you need to know:
EARNINGS FORECAST: Adjusted earnings of 47 cents a share is the
average of analysts surveyed by Thomson Reuters, compared with 56
cents a year ago.
REVENUE FORECAST: Revenue of $17.56 billion is forecast,
compared with $17.26 billion last year.
WHAT TO WATCH FOR:
--SALES AND TRAFFIC: Target's sales and traffic have been in a
slump, with the number of customer visits having fallen for seven
straight quarters. That could be the case again in the third
quarter, as Target forecast that sales would either be flat or up
1% for the period. The big-box retailer has been in a multiyear
slump as customers found its merchandise didn't stand out and fewer
new products appeared on shelves. It has also lost ground to
ecommerce retailers like Amazon.
--PROMOTIONAL LEVELS: Target appears to be willing to sacrifice
margins to win back customers, especially during this all-important
holiday season. It is offering free shipping on all online orders
this holiday season. Meanwhile, the investment bank Janney said
Target's offer of 40% off nearly all apparel is one of the more
aggressive deals being offered during the holidays.
--CANADA: While Target tries to stabilize the U.S. business, it
is trying to salvage a botched expansion into Canada. Investors are
eager to see what progress Target has made in fixing operations in
Canada, where the expansion was dogged by prices that were too high
and shelves that were bare because of inventory management
problems. Analysts expect Target to take another stab at fixing the
business before deciding whether to continue.
--CEO VISION: Target's new chief executive, Brian Cornell, has
been in his job for a little more than three months, and investors
will want to hear more about his vision for the retailer. He has
spoken about focusing more on just a half-dozen key categories such
as fashion, furniture and baby products that have helped Target
stand out in the past. A key question is what the future of
Target's grocery business will look like.
Write to Paul Ziobro at paul.ziobro@wsj.com
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