Target hits bulls eye as second-quarter profits and sales top estimates

Target earnings

Target Corp (NYSE: TGT) raised its full-year earnings per share guidance on Wednesday, after reporting revenue and profits that topped Wall Street expectations. Same-day shipping services and in-store pickup boosted Target’s same-store sales growth during the second quarter.

Total revenue rose 3.6% while online sales jumped 34% on a comparable basis. Target has been spending heavily in various new initiatives in its fight against competitors such as Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT).

Earlier this week, the company announced it is launching grocery brand Good & Gather to ramp up its grocery delivery business. It’s also seeing huge gains from the misfortunes of retailers such as Toys “R” Us.

Shares of the big-box retailer gained $14.32, or 16.74% to $99.85 in morning trading. The company’s stock, which has a market value of more than $43 billion, has rallied more than 28% since the beginning of the year.

TGT Earnings & Outlook

The Minneapolis company said it had net income of $938 million, or $1.82 per share, up from $799 million, or $1.49 per share a year earlier.

Excluding items, Target earned $1.82 per share, well above Refinitiv consensus for earnings of $1.62 per share. Overall, revenue in the three months ended August 3 was $18.42 billion from $17.78 billion in the same period last year.

Comparable-store sales, a closely watched metric, rose 3.4% during the quarter. Analysts were expecting comparable-store sales growth of 2.9%.

For the full year, Target sees adjusted profit earnings of between $5.90 to $6.20 per share, up from its previous guidance for adjusted earnings of between $5.75 to $6.05 per share.

Target CEO Comments

“We are really pleased with our second quarter performance, which demonstrates the strength of our strategy and the durable financial model we’ve built over the last several years. By appealing to shoppers through a compelling assortment, a suite of convenience-driven fulfillment options, competitive prices and an enjoyable shopping experience, we’re increasing Target’s relevancy and deepening the relationship between our guests and our brand,” commented Target CEO Brian Cornell.

Target Corp Profile

Target Corp is a leading American general merchandise retailer with 1,844 stores (as of the end of fiscal 2018), offering a variety of products across several categories, including beauty and household essentials (24% of fiscal 2018 sales), apparel and accessories (20%), food and beverage (20%), home furnishings and decor (19%), and hardlines (17%).

Most of Target’s stores are large-format, averaging around 130,000 square feet. The company has a significant e-commerce presence, deriving around 7% of sales from the channel. In addition to its namesake stores, Target owns Shipt, an online same-day delivery platform. After it exited Canada in 2015, virtually all of Target’s revenue is generated from the United States. – Warrior Trading News