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(Reuters) -Target Corp on Wednesday raised its forecast for annual same-store sales after beating quarterly expectations as Americans prepare early for the holiday season and shop for everything from toys to electronics.
Major retailers, including Amazon.com (NASDAQ:AMZN), Walmart (NYSE:WMT) and Target (NYSE:TGT), have launched sooner-than-usual promotional deals as demand for seasonal items soars and companies look to limit the damage from shipping logjams and other supply problems.
Target said its inventory levels were up more than $2 billion, or a near 20% jump from a year earlier, as it tries to cushion the impact of supply-chain disruptions, which have led to empty shelves and delayed shipments at many retailers.
Comparable sales rose 12.7% in the third quarter ended Oct. 30, beating expectations of 8.4%, according to IBES data from Refinitiv, with almost all of that growth coming from stores.
Store traffic jumped nearly 13% as Target attracted more shoppers by keeping prices low at a time when inflation has been soaring and providing quick same-day delivery services such as Shipt and Drive-Up.
“We’ve seen strength throughout the year and we’ve seen it punctuated during key seasonal moments … That’s going to continue as we move into the holidays,” CEO Brian Cornell said.
The company now expects annual same-store sales to rise in the high single- to low double-digit range, up from its prior forecast of a high single-digit increase. It, however, did not raise its operating-margin expectations.
Shares of Target, which have risen about 50% this year, were down about 2% in premarket trading as the company said its gross margin fell to 28% in the latest quarter from 30.6% a year earlier on higher labor and freight costs.
Target’s total revenue rose by a better-than-expected 13.3% to $25.65 billion. Excluding items, it earned $3.03 per share beating estimates.
