Target shows brick and mortar isn’t dead
Target restored some sanity to the retail industry July 13 when it increased its second quarter sales and profit forecast the day after Amazon cause widespread angst with record Prime Day results.
Target cited improved traffic and sales trends through the first two months of its second quarter as justification to increase its earnings per share estimate to above the high end of a previous range of 95 cents to $1.15 a share. The retailer also said its same store sales would increase modestly, a significant improvement from an earlier forecast that called for a low single digit decline.
The company isn’t due to report results until August 17, but the timing of its pre-announcement lifted the outlook for the retail industry overall in the wake of Amazon’s acquisition of Whole Foods and stuffing Prime Day results. Amazon said its sales on Prime Day (a 30 hour period that began at 9 p.m. July 10) was the highest volume day in its history, surpassing Black Friday and Cyber Monday.
Targets increased guidance pales in comparison and doesn’t mean other retailers are faring as well, but Target Chairman and CEO Brian Cornell said the company’s progress reinforced its confidence and commitment to its strategy outlined earlier this year.
“Following better-than-expected results in the first quarter, we’ve seen additional, broad-based improvement in traffic and category sales trends in the second quarter, despite continued challenges in the competitive environment. Our team is energized and focused on enhancing and modernizing the Target shopping experience, and our guests are responding,” Cornell said. “The launch of Cloud Island in May was a success, and our team will be rolling out four more exclusive brands across home and apparel in the next few months, in support of our plan to launch 12 new brands by the end of 2018. We are also pleased with initial results of the Twin Cities rollout of Target Restock, providing next-day delivery of a shopping-cart-sized shipment from an assortment of more than 10,000 essential items.”