Target Stock Surges on Earnings Beat, Higher Profit Outlook
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Key Takeaways
- Target shares jumped Wednesday after the retailer posted second-quarter earnings that beat expectations.
- Comparable store sales returned to growth in the quarter, as Target said traffic in stores and digital sales grew from the same time last year.
- The retailer lifted its projections for full-year profits, thanks to the strong second-quarter results.
Target (TGT) shares soared Wednesday after the retailer’s second-quarter earnings beat estimates, leading Target to lift its projections for full-year earnings per share (EPS).
Target posted second-quarter revenue of $25.42 billion, up about 2.6% year-over-year and better than analysts had expected, according to estimates compiled by Visible Alpha. The retail giant’s cost-cutting measures also paid off, as Target reported $1.19 billion in net income, a 40% jump from the second quarter of fiscal 2023, and also above analysts’ estimates.
Comparable Store Sales Return to Growth
After comparable store sales declined year-over-year in the first quarter, the metric returned to growth in the second quarter, with comparable store sales up 2% from the same time last year. Target said in-store traffic rose 3% compared to last year, while digital sales jumped 8.7% thanks to the double-digit sales growth of Target’s same-day services like curbside pickup orders and same-day shipping offered in Target’s revamped membership program.
Target also said discretionary sales trends “continued to improve meaningfully” in the quarter, led by growth in categories like apparel and beauty. Target was one of a number of retailers who struggled with lower discretionary spending from many consumers as inflation led many Americans to focus their spending on essentials.
Target projects flat to up to 2% growth in comparable sales for the third quarter, with EPS of $2.10 to $2.40, with analysts projecting $2.21. For the full year, Target said it expects full-year comparable sales on the low end of its initial flat to 2% growth projection, but lifted its EPS projection to a range of $9 to $9.70, compared to $8.60 to $9.60 previously.
Shares of Target were up over 13% to $164.50 in pre-market trading Wednesday following the release.
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