Target Corporation (NYSE: TGT) will look to maintain its 2018 momentum when it reports first-quarter earnings on May 23. Recent store checks suggest changes Target made to its operations are improving customers’ shopping experience, and investors will soon know whether or not those changes are boosting Target’s bottom line as well.
Analysts are expecting Target to report first-quarter earnings per share of $1.38, up from $1.21 in the same quarter a year ago. Analysts are calling for $16.5 billion in revenue, up 3 percent.
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Investors will also be watching same-store sales closely. Target reported 3.6 percent same-store sales growth last quarter and has guided for low-single-digit same-store sales growth to continue in 2018.
Wolfe Research analyst Scott Mushkin says Target’s recent store changes, which include assigning dedicated food and apparel managers, are markedly improving the Target shopping experience.
“These departments also have dedicated staff to make sure the area is well-maintained and stocked,” Muskin says. “Our research suggests the change is having a dramatic impact.”
Muskin said Target’s store remodeling and emphasis on categories such as beer and wine are also clear improvements.
Bank of America analyst Robert Ohmes says the redesigns appear to be resonating with Target shoppers. “We visited several remodeled stores in Minneapolis and Dallas and came away impressed with the new layouts and merchandising initiatives, particularly in home, food, beauty, and adult beverages,” Ohmes says.
Ohmes says Target’s focus on improving its stores puts the company in position to lure business from its competitors. “TGT’s efforts to turn around its U.S. business should accelerate in 2018 and result in market share gains longer-term,” he says.
Bank of America says Target and competitor Walmart ( WMT) will both benefit from a cyclical upswing in discount store business over the next five to ten years.
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In the near term, however, the remodeled Target stores may not be enough to drive an earnings beat. Bank of America is forecasting first-quarter EPS of $1.37, slightly below consensus estimates.
Wolfe Research has an “outperform” rating for Target. Bank of America has a “buy” rating and $86 price target for TGT stock.
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Target Corporation Earnings: What to Expect From TGT Stock originally appeared on usnews.com
