NEW YORK (AP) — Target reported a 3.1 percent gain in third-quarter profits to beat Wall Street expectations as its U.S. business rebounded from a massive data breach that occurred just before Christmas last year.
The results are encouraging as the discount retailer gears up for the holiday shopping season, a year after last year's data breach sent potential customers elsewhere.
It was a major factor in the ousting of CEO Gregg Steinhafel in May. Former PepsiCo executive Brian Cornell took over in August, but he is now tasked with keeping the momentum going and reclaiming the retailer's image as a purveyor of cheap chic fashions and home decor.
Cornell must also salvage Target's botched entry into Canada, which has been a big drag on profits.
Target is now playing catch-up, particularly with Amazon.com, and has put into place a service that allows people to order online and pick up goods at a store. It is also cutting down shipping time by using its network of stores to accommodate online shopping.
"We're encouraged by the improving trend we've seen in our U.S. business throughout the year and our fourth-quarter plans are designed to sustain this momentum," said Cornell.
Cornell said operations in Canada have improved ahead of the holiday season with changes to its pricing and product assortment.
Even before Cornell assumed the helm Target had begun to reassess its operations, sprucing up its baby department, adding mannequins to its fashion areas and it's added beauty advisers assist customers. Cornell is now focused on a handful of areas like children's products, fashion and furniture. That could mean less reliance on groceries.
That would be a dramatic change from just a few years ago when Target aggressively expanded into groceries during the recession to increase traffic in its stores. Over the past eight years, fashion and home furnishings sales have dropped from a combined 47 percent, to 36 percent of total sales. At the same time, food, pet supplies as well as household essential rose from 30 percent, to 46 percent of total sales, according to UBS retail analyst Michael Lasser.
Target has unveiled an aggressive plan to win its share of holiday sales this year. The company plans to open stores at 6 p.m. on Thanksgiving Day, two hours earlier than last year.
That's the same time that Wal-Mart plans to begin offering its door-buster deals.
Starting in late October, Target began offering free shipping on all items including $6 lipstick until Dec. 20.
Wal-Mart announced Tuesday that for the second year in a row, it is lowering its prices on popular toys, electronics and other items to match or beat select Black Friday deals from top rivals. The sale, which doubles the number of items included in the pre-Black Friday event last year, starts Friday.
But the results posted Wednesday show that Target has a chance of winning back shoppers during the most important shopping period of the year.
Target, based in Minneapolis, reported earnings of 55 cents per share, or $352 million, for the three-month period ended Nov. 1. That compares with 54 cents per share, or $341 million, in the year ago period.
The results beat Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 47 cents per share.
Target's revenue rose 2.8 percent to $17.7 billion. Analysts expected $17.53 billion, according to Zacks.
The company posted a 1.2 percent gain in revenue at stores opened at least a year. That was better than Target's expected range of unchanged to up 1 percent. It marked the first increase in that measure since the third quarter of fiscal 2013.