Target hits omnichannel bullseye
Target is predicting a blockbuster holiday season after the retailer reported its highest comps in more than a decade during the second quarter and raised its profit outlook for the year.
Target reported Wednesday that same store sales were up 6.5 percent during the second quarter ended Aug. 4. Customer traffic grew 6.4%. The impressive results seem to support the company's multibillion-dollar investment, announced in 2017, to boost digital operations, expand its private label collections, lower prices, and spruce up stores.
"We are extremely pleased with Target's second quarter results, which demonstrate our guests' excitement for the enhanced and differentiated shopping experience we're building. For the second consecutive quarter, traffic growth is better than we've seen in well over 10 years, driving 6.5 percent comp growth - Target's best in 13 years." said Brian Cornell, chairman and chief executive officer of Target Corporation. "We laid out a clear strategy at the beginning of 2017, and throughout this year we've been accelerating the pace of execution. We're on track to deliver a strong back half and we've updated our full year guidance to reflect the strength of our business and the consumer economy. As we look ahead to 2019, we expect to achieve scale across the full slate of our initiatives - creating efficiencies and cost-savings, further strengthening our guest experience and positioning Target to continue gaining market share."
Online sales at Target soared 41 percent, surging past the 28 percent jump in the previous quarter. The retailer reported a profit of $799 million, or $1.49 per share. Earnings, adjusted for pretax gains, came to $1.47 per share, which is 7 cents better than Wall Street expected. Revenue was up 6.9% to $17.78 billion, also better than expected.
The company now expects earnings for the current fiscal year to be $5.30 to $5.50.
Shares rose nearly 5 percent, or $3.94 to $87.21 in pre-market trading.
During the second quarter, the company made capital investments of $1,029 million in property and equipment, and returned $761 million to shareholders, including:
- Dividends of $330 million, compared with $331 million in second quarter 2017, reflecting a decline in share count offset by an increase in the dividend per share.
- Share repurchases totaling $431 million that retired 5.8 million shares of common stock at an average price of $74.31.
As of the end of the second quarter, the company had approximately $2.3 billion of remaining capacity under its current $5 billion share repurchase program, reflecting second quarter purchases and an accelerated share repurchase transaction which will settle in the third quarter.
Target today operates more than 1,800 stores and Target.com.