By Aishwarya Venugopal
(Reuters) - Target Corp (NYSE:TGT) forecast 2019 profit above Wall Street estimates on Tuesday as strong online sales and higher footfall at stores drove better-than-expected holiday sales, sending its shares up 6 percent.
Target upped its delivery offerings in the highly competitive holiday shopping season in a bid to get an edge over online behemoth Amazon.com Inc (NASDAQ:AMZN) and brick-and-mortar rivals like Walmart (NYSE:WMT) Inc.
The Minneapolis-based retailer offered free two-day shipping on hundreds of thousands of items and it said spruced up "buy online and pick up at store" options accounted for three quarters of online sales.
"We have been driving an ambitious agenda to transform our company, evolve with our guests and drive strong growth," Chief Executive Officer Brian Cornell said. "On every count we've been successful."
The company's comparable online sales grew 31 percent in the quarter. In-store traffic grew 4.5 percent in the quarter.
"Target's strategic initiatives ...are clearly bearing fruit, with its online push continuing to generate impressive gains," Moody's analyst Charlie O'Shea said.
Target's comparable sales, that include both in-store and digital sales, rose 5.3 percent, beating analysts estimate of 5.08 percent, according to IBES data from Refinitiv.
Online contributed 2.4 percentage points to these sales, while the retailer also recorded market share gains across all five of its core merchandise categories that include home and apparel.
These investments have, however, hurt Target's margins. In the quarter gross profit margin fell to 25.7 percent from 26.1 percent, a year earlier.
The company forecast 2019 adjusted profit between $5.75 and $6.05 per share, above analysts expectations of $5.61 per share.
Target also expects comparable sales to clock in a low- to mid-single digit increase, while analysts were expecting it to grow at 2.54 percent.
Excluding certain items, the company earned $1.53 per share, a cent above analysts' expectations.
The company's total revenue fell marginally to $22.98 billion in the quarter ended Feb. 2, edging past analysts estimate of $22.96 billion.
Target's shares were up 6.21 percent at $77.20 in early trading on Tuesday. The stock is up nearly 10 percent this year.