Morningstar

Target's Results Hit the Mark

The narrow-moat retailer continues to benefit from its decision to part ways with its lossmaking pharmacy business and efforts to drive organization-wide efficiencies.

Securities In This Article
Target Corp
(TGT)

While sales continued to languish in the third quarter, no-moat

Comps ticked down just 0.2%, and while still negative, this was a moderation from the 1.1% decline in the second quarter. Traffic slipped 1.2%, as weakness in electronics and grocery persisted, although prices increased 3.5% and units per transaction ticked down 2.5%. Similar to the recent past, management attributed this improvement to signature categories that are growing at more than 3 times the rate of other categories. This suggests to us that an increased focus on its core competencies (style, baby, kids, and wellness) is bearing fruit. We're not convinced the solid back-to-school season performance will persist, with heightened competition making it difficult to exceed its updated comp range (down 1% to up 1%) during the upcoming holiday quarter.

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About the Author

Erin Lash, CFA

Sector Director
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Erin Lash, CFA, is a sector director, AM Consumer, for Morningstar*. In addition to leading the sector team, she covers packaged food and household and personal care companies. Beyond managing a team of nine analysts and associates covering an array of consumer firms, Lash also conducts fundamental analysis of 13 multi-billion-dollar market capitalization firms in the packaged food and household and personal care space.

Before joining Morningstar in 2006, Lash spent four years as an investment analyst covering retail, transportation, and technology firms for State Farm Insurance. In this capacity, Lash analyzed financial statements, business strategy, and fundamentals of owned companies and potential investments, presenting her recommendations based on this analysis to State Farm portfolio managers for ownership consideration.

Lash holds a bachelor’s degree in finance from Bradley University’s Foster College of Business. She also holds a master’s degree in business administration, with concentrations in accounting and finance, from the University of Chicago Booth School of Business. Lash has completed the Chartered Financial Analyst® designation. She ranked second in the food and tobacco industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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