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Aug 22, 2018

Target earnings q2 2018 top Wall Street expectations

Lauren Thomas

Customers shop at a Target store in Chicago, Illinois. Getty Images
Customers shop at a Target store in Chicago, Illinois.
Shares of Target surged in premarket trading Wednesday after the national retailer reported an unprecedented amount of growth in foot traffic at its stores and second-quarter profit and revenue that surpassed analysts' expectations.
The big box retailer said digital sales also jumped more than 40 percent and raised its earnings outlook for the full year.
Its shares were up almost 6 percent in premarket trading on the news.
Here's what the company reported compared with what analysts were expecting, according to a survey by Thomson Reuters:
  • Adjusted earnings per share: $1.47 vs. $1.40 expected
  • Revenue: $17.8 billion vs. $17.28 billion expected
  • Same-store sales: up 6.5 percent vs. an increase of 4 percent expected
Net income was $799 million, or $1.49 per share, compared with $671 million, or $1.21 a share, a year ago. Excluding one-time items, Target earned $1.47 a share, 7 cents ahead of analysts' expectations.
Revenue climbed nearly 7 percent to $17.8 billion from $16.6 billion a year ago, again ahead of an expected $17.28 billion in sales.
Sales at Target stores open for at least 12 months were up 6.5 percent, better than an anticipated increase of 4 percent and the strongest same-store sales growth at Target in 13 years. That consisted of online sales growth of 41 percent, Target said, compared with an increase of 32 percent a year ago.
Looking to the full year, Target now expects to earn between $5.30 and $5.50 per share, adjusted, compared with a prior range of between $5.15 and $5.45 a share in fiscal 2018.
Target has been focused on reinvesting in its business ever since it laid out a strategy at the start of last year to pour $7 billion into expanding its e-commerce platform, bulking up its line-up of in-house brands, opening new small-format stores and remodeling existing locations.
"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," CEO Brian Cornell said in a statement on Wednesday.
The big-box retailer has also been improving its supply chain operations. It acquired Shipt to help speed same-day deliveries, rivaling companies like Kroger, Walmart and Amazon that are looking to do more of the same. Particularly within grocery, however, Target is believed by analysts to have a weaker fresh food offering than its peers. Its revamped and smaller-format stores are starting to include a broader grocery assortment.
Target shares are up about 27 percent so far this year, bringing the retailer's market cap to roughly $44.1 billion. That compares with Walmart, which has a market cap of about $282 billion, while its stock has fallen nearly 3 percent over the same time period.

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