Target Corp. (NYSE: TGT) beat second quarter estimates in both revenue and earnings by analysts.
Target reported adjusted earnings of $1.23 a share compared with a forecast profit of $1.19 per share, which is now up 14.2 year over year. Revenue was $16.43 billion versus an estimate of $16.30 billion, which is now up 1.6 percent year over year. Same-store sales climbed 1.3 percent, better than the expected 0.7 percent growth, according to analysts’ consensus by Thomson Reuters.
Net income fell to $672 million, or $1.22 per share, in the second quarter, from $680 million, or $1.16 per share, and is down 1.2 percent year over year. Target’s digital sales increased by 32 percent, which helped drive much of the revenue and same-store sales this quarter.
“I want to thank the team for their strong execution in the second quarter, which drove broad-based improvement in Target’s performance. In particular, we are pleased that second-quarter traffic increased more than 2 percent, reflecting growth in both our store and digital channels,” said Brian Cornell, chairman and CEO of Target.
Mark Tritton, Target CMO, said Target saw gains across all discretionary categories during the period, including apparel and home, but comps in Target's food business remained flat. Sales of produce and adult beverages continue to be strong.
"While we believe Target has much further to go before the grocery business is fully fixed, we applaud the start it has made in turning around this challenging part of the operation," GlobalData Retail Managing Director Neil Saunders wrote in a note to clients.
Target has been facing tough competition against other retailers and even online retailers giants such as Wal-Mart or Amazon leaving Target struggling to keep up with the others.
Target recently launched its plan to invest more than $7 billion in itself over the next three years, in order to "evolve" to meet consumer preferences.
Target hopes that the new 12 original brands coming out over the next two years this will help increase more shoppers coming back to stores, but also continuing efforts to help grow its digital platform for online shoppers.
Target expects both the third and fourth quarter for the rest of the fiscal year to be comparable growth within the range of what the company reported for the first and second quarters of this year. The company expects sales growth will be either in the range of -1 percent or 1 percent.
For the third quarter, the company expects an EPS of $0.75 to $0.95. As for the full year, the company expects adjusted EPS to be $4.34 to $4.54 compared to its previous estimates of $3.80 to $4.20.
“We continue to focus on our long-term strategy, as we work to transform every part of our business and build an even better Target that will thrive in this new era in retail. While our recent results are encouraging, we will continue to plan prudently as we invest in building our brands, our digital channel, the value we provide our guests and elevating service levels in our stores.”