More customers, exclusive brands boost Target
A boost in customers and strong sales of exclusive brands aided Target during the second quarter, and it plans to accelerate remodeling of its stores and the testing of new online order services to maintain its momentum.
Sales at Target stores open at least a year increased 1.3% in the fiscal second quarter, beating S&P Global Market Intelligence expectations of 0.6%.
The encouraging results gave a lift to Target shares, which ended Wednesday up 3.6% to $56.31.
“They’re rewarding us with their footsteps and their clicks,” Target CEO Brian Cornell said in a call with reporters Wednesday.
Target, like many of its peers, has been investing in improving its digital experience, and in the second quarter, the big-box retail- er saw a 32% uptick in online sales compared to the same period a year ago.
But it also has been revamping and reshaping its stores. It has been shifting into new store for- mats, opening smaller locations on college campuses and in urban neighborhoods where the products are tailored to the tastes of that particular market.
Target delivered positive news in July when it previewed its quarterly earnings by bolstering profit and sales projections, based in part on an uptick in shoppers and popularity of new brands such as Cat & Jack and baby products lineup Cloud Island. A 2.1% increase in foot traffic during the period was “what’s most impressive” while the company’s exclusive brands “should ideally help differentiate the company” from Walmart and Amazon, Cowen retail analyst Oliver Chen said in a note to investors.
Target said its second-quarter sales rose 1.6% to $16.4 billion, edging S&P expectations of $16.3 billion. Net earnings declined
1.2% to $672 million, though earnings per share based on continuing operations increased
4.7% to $1.22 and beat S&P expectations of $1.18 a share.