Target Reports Second Quarter 2018 Earnings
MINNEAPOLIS, MN - Target is off to the races. The retailer announced on Wednesday that sales at stores open for at least a year have spiked 6.5 percent, the fastest pace since 2005.
"We are extremely pleased with Target's second quarter results, which demonstrate our guests' excitement for the enhanced and differentiated shopping experience we're building. For the second consecutive quarter, traffic growth is better than we've seen in well over 10 years, driving 6.5 percent comp growth—Target's best in 13 years," said CEO and Chairman Brian Cornell.
The jump in sales can be seen as a reflection of its shifting strategy and the consequential 47 percent increase in the retailer’s stock over the past year. Target’s new plan is to improve store experiences and generate more digital sales after a slow 2016 holiday shopping season. To do this, Target informed investors it would spend $7 billion to redesign its stores, extend its exclusive brands, and lower prices on items, according to CNN Money. In addition to these steps, the retailer ventured into a new store format, which has proven to be successful.
"We laid out a clear strategy at the beginning of 2017, and throughout this year we've been accelerating the pace of execution. We're on track to deliver a strong back half and we've updated our full year guidance to reflect the strength of our business and the consumer economy," Cornell continued. "As we look ahead to 2019, we expect to achieve scale across the full slate of our initiatives—creating efficiencies and cost-savings, further strengthening our guest experience and positioning Target to continue gaining market share."
- Traffic growth of 6.4 percent is by far the strongest since the company began reporting traffic in 2008
- Comparable sales increased 6.5 percent, the best comp at Target in 13 years
- Comparable store sales grew 4.9 percent
- Comparable digital sales grew 41 percent, on top of 32 percent growth a year ago
- GAAP EPS from continuing operations were $1.49, up 22.7 percent from last year. Adjusted EPS were $1.47, up 19.8 percent from last year
- For the back half of 2018, the company has raised its outlook for both comparable sales and EPS
- The midpoint of Target's third quarter EPS guidance range of $1.00 to $1.20 represents growth of more than 20 percent compared with last year
Further, as Shipt’s member base tripled over the last year, a growth that is of particular importance since the retailer recently purchased the delivery service for $550 million, Target’s customers have proven to spend up to three times more when they order from the digital platform than when they enter brick and mortar. Additionally, Target’s digital sales increased 41 percent last quarter when compared with the same time last year.
How will Target’s strategy continue to evolve, and will it change the face of fresh produce within its stores as a result? AndNowUKnow will keep you updated with the latest.