Target Corp. (NYSE:TGT) Q1 2019 Earnings Conference Call Transcript

May 22, 2019 • 08:00 am ET


Target Corp. (NYSE:TGT) Q1 2019 Earnings Conference Call Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to the Target Corporation First Quarter Earnings Release Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will invite you to participate in the question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded Wednesday May 22nd, 2019.

I would now like to turn the conference over to Mr. John Hulbert, Vice President, Investor Relations. Please go ahead, sir.

John Hulbert

Good morning, everyone and thank you for joining us on our first quarter 2019 earnings conference call. On the line with me today are Brian Cornell, Chairman and Chief Executive Officer; John Mulligan, Chief Operating Officer; Mark Tritton, Chief Merchandising Officer; and Cathy Smith, Chief Financial Officer. In a few moments. Brian, John, Mark and Cathy will provide their perspective on our first quarter performance, our outlook and progress on our long-term strategic initiatives. Following their remarks, we'll open the phone lines for a question-and-answer session.

This morning, we are joined on this conference call by investors and others who are listening to our comments via webcast. Following the call, Cathy and I will be available to answer your follow-up questions.

And finally as a reminder, any forward-looking statements that we make this morning are subject to risks and uncertainties. The most important of which are described in our SEC filings. Also in these remarks, we refer to non-GAAP financial measures, including adjusted earnings per share. Reconciliations of all non-GAAP numbers to the most directly comparable GAAP number are included in this morning's press release which is posted on our Investor Relations website.

With that, I'll turn it over to Brian for his thoughts on our first quarter performance and our outlook for the rest of the year and beyond. Brian?

Brian Cornell

Thanks, John. We're really pleased with our first quarter financial performance, which reflects continued progress on the strategic initiatives we began rolling out more than two years ago. Since that time, we've seen a meaningful acceleration in our business. In fact, the first quarter marked Target's eighth consecutive quarter of comparable sales increases. In the first quarter, comparable sales growth of 4.8% was a bit ahead of our expectations. As Mark will cover in more detail, this was driven by broad strength across all of our merchandising categories, particularly in toys and baby.

We also saw strength across channels in the first quarter. Store comparable sales were up 2.7%, while comp digital sales were up 42% adding 2.1 percentage points to the Company's comp growth. As John will cover in more detail, we're seeing a really positive guest response to our same-day digital fulfillment services, which drove well over half of our digital sales growth in the quarter.

Our ability to offer these same-day services which deliver high level satisfaction is a result of our strategy to put stores, the center of fulfillment. In fact, our stores handle more than 80% of our first quarter digital volume, including all of our same-day options combined