A Target store stands in Manhattan, New York City, on March 5, 2024.
Spencer Platt | Getty Images
Target said Wednesday that sales grew about 3% in its fiscal second quarter, a return to growth after a prolonged stretch of sluggish sales and squeezed profits.
The discounter beat Wall Street’s earnings and revenue expectations, as shoppers made more visits to Target’s stores and website, and bought more discretionary items like clothing.
Even so, the company stuck by its previous full-year sales forecast and struck a cautious note. Target said it expects comparable sales for the full year to range from flat to up 2%, but said it now expects the increase will likely be in the lower half of the range.
Target raised its profit guidance, however, saying it expects adjusted earnings per share to range from $9 to $9.70, up from the previous range of $8.60 and $9.60.
The company’s shares rose more than 10% in afternoon trading as Target showed improvement in generating profits.
On a call with reporters, Chief Operating Officer Michael Fiddelke said Target took a “measured approach” with its outlook because it’s hard to predict consumers’ mindsets and the state of the economy in the coming months.
“While we’ve been pleased with our performance so far this year, and our view of the consumer remains largely the same, the range of possibilities and the macroeconomic backdrop in consumer data and in our business remains unusually high,” he said.
Here’s what Target reported for the three-month period that ended Aug. 3 compared with what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $2.57 vs. $2.18 expected
- Revenue: $25.45 billion vs. $25.21 billion expected
Target, known for its wide array of trendy but low-priced merchandise, has been hurt as consumers buy fewer items like new outfits or home decor while they pay more for everyday expenses like food and housing. The big-box retailer has also struggled with reduced profits in recent quarters, as customers purchased items like groceries that tend to be lower margin, and losses from damaged inventory and theft, including organized retail crime, took a toll.
Those trends improved in the second quarter, as Target attracted shoppers with new merchandise and reduced prices.
Target’s net income jumped to $1.19 billion, or $2.57 per share, from $835 million, or $1.80 per share, in the year-ago quarter. That’s a more than 40% year-over-year increase.
Total revenue rose from $24.77 billion in the prior year.
Comparable sales climbed 2% in the quarter, the first time in five quarters that Target posted a gain. The industry metric tracks sales online and at stores open at least 13 months.
Digital sales drove most of those gains, growing 8.7% in the quarter, as more customers used same-day services like curbside pickup and home delivery. Comparable store sales rose slightly, up 0.7%.
Target has tried to rev up sales and drive higher foot traffic by deepening loyalty and offering discounts. The…
Read More: Target (TGT) Q2 2024 earnings