According to the second-quarter earnings result released, Target reported the strongest gain in comparable sales of 24.3%. TGT stock is 12% up today.
Target Corporation (NYSE: TGT) released its second-quarter earnings result, blowing past Wall Street predictions. The American retail corporation hit an all-time high in online sales, and stores opened for not less than a year. Also in the quarter, the company added millions of new online customers, which resulted in a profit jump of 80%.
According to the second-quarter earnings result released on the 19th of August, Target reported the strongest gain in comparable sales by 24.3%. In addition, digital comparable sales rose 195% from the previous year, while store comparable sales jumped 10.9%. This accounts for 13.4 percentage points of the company’s comparable sales growth.
Target Second-Quarter Result Exceeds Expectations
Earlier, analysts forecasted figures which were less than Target’s Q2 earnings. Average estimates compiled by Refinitiv revealed the differences between the predicted and earned figures. According to the compiled estimates, Target’s revenue reached $23 billion against the predicted $20.09 billion. The report also showed that Adjusted EPS for Q2 hit $3.38, an 85.7% rise from $1.82 in 2019. Furthermore, same-store sales growth increased by 24.3% over analysts’ expectations of 7.6%.
In a call with reporters, CEO Brian Cornell said that Target’s mix of merchandise and online alternatives resonated with customers who found safe and easy ways to shop during the pandemic. Also in the call, the CEO mentioned the company’s market share gain:
“We remain steadfast in our focus on investing in a safe and convenient shopping experience for our guests, and their trust has resulted in market share gains of $5 billion in the first six months of the year.”
Confident that the company is poised for further growth, the CEO added:
“With our differentiated merchandising assortment, a comprehensive set of convenient fulfillment options, a strong balance sheet, and our deeply dedicated team, we are well-equipped to navigate the ongoing challenges of the pandemic, and continue to grow profitably in the years ahead.”
Referring to the company’s relationship with customers, he added that it has “been one of the big drivers behind our success.”
Target Reports Strong Q2 Results
In the second quarter, Target’s shopping traffic increased significantly as a large number of customers added more items to their baskets. Sales jumped across the five core merchandise categories of the company, including beauty and apparel sales.
Furthermore, customers bought a lot of home-office items and video games during the lockdown, which resulted in an increase in electronic sales. With the increase, Target reported its strongest sales in electronics. Electronic sales climbed more than 70% over its Q2 report in 2019, while sales of home items increased by 30%. Also, beauty sales grew by 20%. Finally, the last two categories, food and beverages, as well as essentials, went up by almost 20%.
In addition, Target’s Q2 net interest expense for 2020 was $2 million higher than the previous year’s $120 million. Also, the effective income tax rate was 22.8% compared with the previous year’s rate of 23%.
Currently trading at $153.79, TGT is more than 12% up over its previous close of $136.90. For the past year, Target’s stock has been increasing. It climbed over 48% in the last twelve months and 19.10% in its year-to-date performance.
For more news from the business world, please follow this link.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.