(Reuters) -Target raised its full-year profit forecast on Wednesday and reported its first increase in quarterly comparable sales in over a year, driven by price cuts that attracted more shoppers to its stores. #TargetProfitForecast
Shares of the Minneapolis-based retailer rose 16%, reaching a near four-month high of $167.40. The stock was on track for its best day in over nine months. This surge followed Target’s new 2024 profit forecast of $9.00 to $9.70 per share, up from the previous range of $8.60 to $9.60.
Second-quarter comparable sales increased by 2% for the quarter ending Aug. 3, marking the first rise in over a year. Analysts had estimated a 1.15% rise, according to LSEG. This performance exceeded expectations and highlighted a positive shift in Target’s sales.
Traffic drove gains in comparable sales as price cuts attracted shoppers facing rising grocery prices and interest rates. The company noted that these discounts significantly boosted customer interest. Overall, price reductions effectively drew in more customers.
Analysts noted that the retailer’s results suggest U.S. consumers are constrained but not in recession mode. They are, however, seeking the best discounts. Consumers are increasingly motivated by banner events and special occasions.
“The consumer is feeling nervous and pinched, and that will weigh on overall spending, but consumers still have plenty of purchasing power. They’re just being picky about where they spend,” said Brian Jacobsen, chief economist at Annex Wealth Management. #TargetProfitForecast
In addition, the company’s success with price adjustments aligns with its broader business goals. This move has not only enhanced the Target profit forecast but also positioned the retailer for continued growth. Consequently, Target is better prepared to meet financial expectations and capitalize on market trends.
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