Target Profits Grow In Q2, So Do Future Aspirations
Target Corporation’s second quarter earnings were a mix of matched expectations and better-than-expected results, which moved the Minneapolis retailer to raise its profit outlook for the rest of the year.
Total sales for the quarter ending August 1 were $17.4 billion—a 2.8 percent lift from Target’s $17 billion Q2 posting last year. Same-store sales were in line with the company’s predictions, jumping 2.4 percent from a year prior. Digital sales contributed 0.6 to its sales growth and increased 30 percent, largely fueled by more than 18 million downloads of the retailer’s coupon app, Cartwheel.
Adjusted earnings per share were $1.22, which came as one of the biggest surprises to analysts—who estimated a result of $1.11. Target itself figured adjusted earnings per share would land between $1.04 and $1.14, a difference of 21 percent. Target has now upped its earnings per share outlook to be from $4.60 to $4.75 for the full year.
Target’s “signature” categories—areas such as style, baby, kids and wellness where the company thrives and can differentiate itself—saw three times the average growth rate compared to other sales areas. Target CEO Brian Cornell added that this would be an area of continued focus for the retailer.
Cornell and newly promoted executive vice president and COO John Mulligan gave predominately optimistic statements during a conference call. Moreover, the two reiterated that Target is working to continue its forward march, as Cornell said the retailer has “much more to accomplish.”
Both men spoke of freeing up hours at a store level to improve guest services and overall experience. More than once, Cornell expressed plans “to reinvent food,” a statement that comes as little surprise considering Target has expanded its food offerings this year and announced plans of a grocery delivery service.
Mulligan noted increased sales in fashion departments, particularly in denim, swimwear and baby clothes, to be a benefactor to the positive quarter. An uptick in mannequin presence, he said, contributed to those results.
“We are seeing a very positive push from back-to-school and back-to-college materials,” said Cornell during the conference call. Typically, Target’s ability to sell school gear and class materials weighs heavily on its third quarter results year-after-year.
Target stock opened at $83.90 today, but has fallen by nearly one percent despite the positive Q2 posting.
Target’s discount-retail rival, Walmart, did not fare quite so well in its second quarter results. The retailer from Arkansas said its profits fell 15 percent compared to last year. Additionally, Walmart moved to lower its anticipated earnings for the year while it works to raise hourly wages and make other internal investments.