Target posts strong Q2 results
Target today announced its second quarter 2024 financial results, which reflected a return to topline growth and strong profit performance.
The company reported second quarter GAAP and adjusted earnings per share of $2.57, an increase of 40% from $1.80 in 2023.
"We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating margins and growing EPS by more than 40% compared to last year. Importantly, our growth was driven entirely by traffic in stores and our digital channels, with double-digit growth in our same-day delivery services," said Brian Cornell, chair and CEO of Target Corporation.
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Cornell continued, "We also saw improving trends across our discretionary categories, most notably in apparel, and we're seeing continued strength in beauty. Looking ahead, even as we maintain the measured outlook that has served us well, we are focused on building on this positive momentum by executing our strategy and providing the unique combination of newness and value that consumers can only find at Target."
Target’s comparable sales increased 2% in the second quarter, reflecting a comparable store sales increase of .7% and a comparable digital sales increase of 8.7%.
Total revenue of $25.5 billion in the second quarter was 2.7% higher than last year, reflecting a total sales increase of 2.6% and a 10.8% increase in other revenue.
Targets second quarter operating income of $1.6 billion was 36.6% higher than last year, driven by sales growth and a higher gross margin rate, Target said.
The retailer's second quarter operating income margin rate of 6.4% grew 160 basis points compared to the prior year, driven by a higher gross margin rate.
Target's traffic grew 3% in the second quarter as compared to the prior year, with all six core merchandising categories delivering traffic growth.
The company's same-day services saw double digit growth, led by low teens growth in Drive Up and Target Circle 360 same-day delivery.
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The retailer's discretionary sales trends continued to improve meaningfully, with apparel comparable sales growing more than 3% in the quarter.
For the third quarter, Target expects a 0 to 2% increase in its comparable sales, and GAAP and adjusted EPS of $2.10 to $2.40.
While Target said it believes its full-year guidance range of a 0 to 2% increase in its comparable sales remains appropriate, it now believes the increase will more likely be in the lower half of that range. However, based on strong profit performance in the front half of the year, the company now expects full-year GAAP and adjusted EPS of $9.00 to $9.70, up from the prior range of $8.60 to $9.60.