By Aishwarya Venugopal
(Reuters) - Target Corp (NYSE:) beat first-quarter estimates for same-store sales and profit on Wednesday, as the retailer's investments in same-day delivery and store revamps drew in more shoppers, sending its shares up more than 7%.
For the last couple of years, Target has been pouring money into services as it tries to better compete with online giant Amazon.com Inc (NASDAQ:) and brick-and-mortar rival Walmart (NYSE:) Inc.
With customers increasingly expecting faster deliveries, Target's services such as Shipt, order pickup and drive-up allow shoppers to pull into a store and pick-up their orders within minutes of placing them through the mobile app or website.
These delivery options drove more than 25% of the better-than-expected 4.8% growth in same-store sales and over half of its 42% growth in comparable digital sales in the quarter.
"Throughout this year, we will continue to extend the reach of our same-day fulfillment options, strengthen our portfolio of owned and exclusive brands," Chief Executive officer Brian Cornell said in a statement.
Target's strategy to build on its pricing and digital plans and open smaller stores in college towns and urban areas helped store traffic rise 4.3% in the quarter.
"Its 1Q print was one of the strongest thus far this earnings season and one of best we've seen from Target in quite some time," Gordon Haskett analyst Chuck Grom said.
The company's net earnings rose to $795 million, or $1.53 per share, in the first quarter ended May 4. Analysts on average were expecting it to earn $1.43 per share, according to IBES data from Refinitiv.
The strong results was followed by a second-quarter adjusted profit forecast of $1.52 to $1.72 per share, which was largely above expectations.
Total revenue rose 5% to $17.63 billion in the quarter and topped expectations of $17.52 billion.
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