Target has forecast disappointing sales for the upcoming quarter and said it expected consumer demand to remain choppy just as it did in the second quarter.
America’s fourth-largest U.S. retailer reported a higher-than-expected quarterly profit and raised its full-year earnings forecast. The company cited a strong demand for clothing and other merchandise at the center of its growth plan.
During a conference call with analyst’s Chief Operating Officer John Mulligan said he expected sales at stores open at least a year to increase 1 percent to 2 percent this quarter, including digital sales growth of approximately 30 percent.
Target’s same-store sales rose 2.4 percent in the second quarter, beating market expectations of 2.2 percent. A 30 percent rise in digital sales contributed 0.6 percentage points.
The company also said it must increase inventory levels to ensure that its shelves are fully stocked to meet customer needs.
CEO Brian Cornell has made a major impact on the company’s bottom line. Since taking over the CEO role he has been pushing a “signature” products line of apparel, baby products and wellness items including organic goods. Those lines have grown three times faster than the company average during the second quarter ended on August 1.
The company has been helped by its exit from a struggling Canada division and by pushing more money into its eCommerce division.
Cornell in March also announced a restructuring plan that includes the elimination of several thousand corporate jobs and the advancement of Target’s grocery operations. The company is also adding $1 billion in investment for its supply chain technology.
Target is now expecting earnings of $4.60 to $4.75 per share, excluding special items. Analysts have predicted $4.62 per share.