Target Corporation (NYSE: TGT) reported a 13% rise in second-quarter earnings this morning, and more importantly backed its earnings expectations for the rest of the year. Target met analysts expectations of 80 cents per share in net income. Same-store sales at stores open more than one year were up 4.9%. For the overall 2007 fiscal earnings, Target said that it believes its previous guida
nce of $3.60 is still in the range of likely outcomes for profit for the year.
Last week, Target's main competitor Wal-Mart Stores Inc (NYSE: WMT) lowered its earnings outlook, saying that customers are being pinched by economic conditions. In response to that, shares of TGT had fallen 7% in the past week. Today after reporting in line results and reaffirming guidance, the stock currently trades up about 0.9% for the day.
Why is Target faring better than Wal-Mart right now? Target has built a brand name that more higher end consumers go to, while Wal-Mart has been unable to lure in the high end consumer. Wal-Mart has recently been criticized, and rightly so in my opinion, for competing solely on pricing. Target has done a much better job competing on product quality, and overall store experience.
Target didn't blow earnings estimates away at all today, but it said that things aren't doing that bad and in this retail environment that is just fine. The company is clearly outperforming Wal-Mart and appears in a much better position for the foreseeable future than many of its competitors.
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