MINNEAPOLIS - Shares of Target Corp. (NYSE:TGT) soared to a three-month peak today after the retailer reported a surprising profit gain in the third quarter, defying expectations with adjusted earnings that outstripped forecasts. The company's disciplined approach to inventory management has been credited for the unexpected boost in profitability.
In premarket trading, Target's stock experienced a notable 14.6% uptick, marking its most impressive performance since the record rally on August 21, 2019. This surge comes even as total sales for the quarter fell short of Wall Street predictions.
For the quarter ending October 28, Target posted net income of $971 million, or $2.10 per share, a significant increase from $712 million, or $1.54 per share, reported in the same period last year. Adjusted earnings per share also rose to $2.10 from $1.54, comfortably surpassing the consensus which had projected a decline to $1.47.
As of October 28, Target has successfully reduced its cost of sales by 7.8% to $18.15 billion and trimmed its inventory value by 13.9% from last year to $14.73 billion.
Looking ahead to the fourth quarter, Target is setting expectations with an adjusted EPS forecast ranging from $1.90 to $2.60, which envelopes the consensus estimate of $2.23. The retailer is also bracing for a mid-single digit percentage range decline in same-store sales.
Over the past three months leading up to today, Target’s stock has seen an 11.4% decline, contrasting with Walmart Inc.'s (NYSE:NYSE:WMT) shares which climbed by 5.3%, and the S&P 500 index that showed a growth of 1.3%. Despite recent challenges and market trends, Target's latest financial results have provided a positive outlook for investors and analysts alike as it heads into the final quarter of the fiscal year.
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