Target’s profits, same-store sales soar in Q2
Target crushed all estimates for its second quarter as it posted skyrocketing profits and the strongest quarterly same-store sales growth in its history amid strong digital and store growth.
As if that wasn’t enough, the retailer said it has gained approximately $5 billion in market share during the first half of the year, surpassing all of 2019.
Total comparable sales grew 24.3% in the quarter ended Aug.1, the strongest Target has ever reported. E-commerce sales nearly tripled, increasing 195%. Same-store sales rose 10.9%.
Target’s net income soared 80% $1.69 billion, or a record $3.35 per share, up from $938 million, or $1.82 in the year-ago period. Adjusted earnings per share were $3.38 per share, also a record. The Street consensus was for $1.63 per share. Target said its strong operating performance offset “unprecedented investments” in employee pay and benefits. (In July, Target raised its minimum wage to $15 per hour.)
Revenue rose to $22.98 billion, up from $18.42 billion last year, and easily topping estimates for and $19.97 billion. The company recorded growth across its five core merchandise categories, with apparel moving from a first-quarter decline to double-digit growth in the second. The retailer saw its strongest sales in electronics, up more than 70% over the same time last year. Target’s new private label grocery brand, Good & Gather, which debuted last fall, hit $1 billion in sales.
In a statement, CEO Brian Cornell noted that Target’s stores were the key to its “unprecedented growth” during the quarter. More than 90% of its sales growth involved a store, whether the customer made the purchase at the register, had it shipped it from a store, or picked it up at a store. Stores enabled more than three-quarters of Target’s digital sales. In-store pick-up sales increased by more than 60%.
The retailer added 10 million new digital customers in the first half of the year as its same-day fulfillment offerings grew 273%. The fastest-growth was in drive-up, up more than 700%. Sales fulfilled by Shipt grew more than 350%.
“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,” Cornell stated. “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.”