The retailer exceeded analyst estimates with its 3.7 percent rise in profit, and was upbeat about its website and fourth-quarter prospects.
Target Corp. had a little more spring in its step this fall.
The Minneapolis-based discount retailer Wednesday reported its net income for the third quarter rose 3.7 percent from a year ago to $555 million.
Target executives also expressed optimism that the holiday-driven fourth quarter would be upbeat and gave assurances that headline-grabbing problems with its new online system have been fixed.
"We believe the platform is stable," CEO Gregg Steinhafel told analysts in a conference call. "We expected some issues [when Target launched its own website], and we got that and more."
Target executives said the discount retailer "made a tremendous amount of fixes" on it website after an embarrassing crash in September, when Target's online presence was overwhelmed after it launched a popular line of apparel and accessories by Italian designer Missoni.
Some customers couldn't place orders during the meltdown, while others said they lost orders. Target has dealt with several crashes since it relaunched its website in August.
"Our online business has been working tirelessly" since then, said Steinhafel, who added there is more work to be done. "We're not yet providing a consistent experience online," he said.
Target's website will be key as the retailer enters the critical holiday selling season. With Black Friday next week, Target cannot afford for its site to crash.
Core business solid
Steinhafel described the company's earnings per share of 82 cents as "noteworthy" compared with Wall Street's estimate of 74 cents per share.
"We saw meaningful sales [growth] in an environment where consumers are making fewer trips [to the store]," Steinhafel said in a morning conference call with stock analysts. The company said its solid earnings performance was driven by its core business and its "Red Card" credit and debit card segment.
"Great quarter," said Piper Jaffray analyst Jeff Klinefelter.
Vice president for merchandise Kathryn Tesija said Target was pleased by the "pace and mix" of sales in the third quarter. She said food, beauty and health care products moved strongly while sales of items for the home were slower, partly in response to uneasiness in the economy.
Same-store sales, a key year-over-year indicator of retail activity, rose 4.3 percent.
"Their momentum continued to build as the quarter and the year progressed," said Edward Jones & Co. analyst Matt Arnold. "Each month was solid. That's one of the best same-store sales numbers that we've seen in years."
Arnold said Target's performance demonstrates that its expanded grocery presence and the 5 percent discount that accompanies Red Card transaction "are doing their job."
Dave Brennan, a retail expert at the University of St. Thomas, said the school's just-released survey of Twin Cities shoppers is promising for Target in the coming holiday season. The survey shows that households on average will spend 3.4 percent more during the holiday this year.
"For an upscale retailer like Target, it bodes really well from a spending standpoint. They will see real good sales," said Brennan, who is co-director of St. Thomas's Institute for Retail Excellence. "Traffic is up marginally, but the market basket ticket is going to be higher."
Target's stock was in positive territory most of the day but closed down 24 cents at $52.94 after the broader markets dropped late in the trading session.
David Phelps • 612-673-7269