Target Reports Second Quarter 2018 Earnings

Everyone loves a good Target run—well, except when we check out bank accounts. Proving that the retailer is at the top of its game in 13 years, the company announced that store sales for those open within the last year have spiked 6.5 percent, the fastest pace since 2005.

"We are extremely pleased with Target's second quarter results, which demonstrate our guests' excitement for the enhanced and differentiated shopping experience we're building. For the second consecutive quarter, traffic growth is better than we've seen in well over 10 years, driving 6.5 percent comp growth—Target's best in 13 years," said CEO and Chairman Brian Cornell.

The spike in sales can be viewed as a result of the retailer’s shifting strategy and the 47 percent increase in its stock over the past year. Moving forward, Target’s plan is to improve store experiences to generate more digital sales after seeing a slow 2016 holiday shopping season. To accomplish this goal, the retailer told its investors that it would spend $7 billion to redesign its stores, extend its exclusive brands, and lower prices on items, according to CNN Money. On top of all of these growth opportunities, Target has ventured into a new and smaller store format—a successful venture, indeed.

"We laid out a clear strategy at the beginning of 2017, and throughout this year we've been accelerating the pace of execution. We're on track to deliver a strong back half and we've updated our full year guidance to reflect the strength of our business and the consumer economy," Cornell continued. "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."

Target’s quarterly report stated the following:

• Traffic growth of 6.4 percent is by far the strongest since the company began reporting traffic in 2008
• Comparable sales increased 6.5 percent, the best comp at Target in 13 years
  Comparable store sales grew 4.9 percent
• Comparable digital sales grew 41 percent, on top of 32 percent growth a year ago
• GAAP EPS from continuing operations were $1.49, up 22.7 percent from last year. Adjusted EPS were $1.47, up 19.8 percent from last year
• For the back half of 2018, the company has raised its outlook for both comparable sales and EPS
• The midpoint of Target's third quarter EPS guidance range of $1.00 to $1.20 represents growth of more than 20 percent compared with last year

Target’s purchase of Shipt for $550 million is also a huge source for growth opportunities since latter’s member base tripling over the last year. The former’s customers have proven to spend up to three times more when they order from the digital platform than when they enter brick-and-mortar stores. Target’s digital sales also increased by 41 percent last quarter when compared with the same time last year.

How will Target’s strategy impact its competitors’ focuses? Deli Market News will keep you updated with the latest.