Target shares skyrocketed on Wednesday after the big-box retailer reported earnings that blew past expectations ahead of the critical holiday shopping season.
Target ($TGT) beat on the top and bottom lines and showed eye-popping same-store sales growth of 4.5 percent. Comp sales are the most watched metric for retailers.
The company has been in the midst of a transformation of sorts, spending heavily on e-commerce, delivery logistics, and store renovations. And it's clearly paying off. Target CEO Brian Cornell said in a conference call that the quarterly earnings show "further proof of the durability" of that investment decision.
Coming on the heels of rival Walmart's earnings beat ー which was the result of a surging grocery business ー Target's numbers give more support to the theory that the U.S. consumer is carrying the tariff-battered American economy on its back. That theory will be given the ultimate test now, with the holiday shopping season about to officially begin. Target has said it will spend an additional $50 million on wages this quarter to ensure it has enough staff to deal with the holiday crush.
It will also be the first big test of Walmart's next-day delivery service. Target is offering free standard shipping on hundreds of thousands of items in a bid to lure customers away from Amazon. Cornell told CNBC that the company is improving on its shipping economics by sending more items directly from stores rather than fulfillment centers, which results in average savings of 40 percent per order.
Target wasn't the only big box to see its shares pop on earnings. Lowe's jumped after the home-improvement retailer beat expectations and raised guidance even though revenue fell short.
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