Target Corporation (NYSE:TGT) entered its spring earnings like a typical Minnesota sports team. The record was bad — TGT stock was reeling, that is — and fans wanted the coach’s head.
But then Wednesday morning happened, and Target surprised the Street. Earnings of $681 million ($1.22 per share) beat the company’s own guidance, analyst expectations and even the whisper number of 93 cents per share. Happy days!
True, sales were below those a year ago — $16.017 billion against $16.196 billion in 2016 — but analysts had only been expecting $15.61 billion in revenue. So that’s a beat, too.
The predictable result was that traders reversed themselves based on the data. TGT stock jumped nearly 7% in Wednesday’s premarket trade. And shares should open trading higher than they’ve been since the company announced a disappointing Christmas quarter three months ago.
Still, I’m not singing.
Target’s Future Still Is Cloudy
To be sure, the skies have not cleared around the Minneapolis-based retailer. Its “store of the future” in Silicon Valley is still canceled. Its chief “innovation officer,” Casey Carl, has been pushed out the door.
Carl joined the company in 2011 to fix the company’s e-commerce site, and while he did that, Target is still not a big player online, with just 4.3% of its revenue coming from there during the most recent quarter. That’s despite initiatives for in-store pick-up and big claims from management a few years ago that Target would be a player there.
CEO Brian Cornell has gone back to basics — the big suburban stores that made Target famous — and is cleaning house in its executive ranks. Some top executives even had to take pay cuts.
Think of it as a football team that cans its assistant coaches but keeps the head coach on for one more year. Many writers see the changes as cosmetic and want Cornell to go. Cornell says he wants “immediate gains,” that the company had gone too far in the direction of expect more and needed to emphasize pay less, the second half of its slogan.
Target has tossed the fancy passing-game and is going back to running up the middle. It worked for Bronko Nagurski. But Bronko passed away in 1990.
Fighting to Stay Up
The company is testing a “Target Restock” program for members of its Redcard loyalty program, restocking customer shelves with essentials on a regular basis. Sounds a lot like Amazon’s “Dash” buttons, which customers press to automatically re-order things like laundry detergent when they run low.