Targets (NYSE:TGT) Q-2 Revenue, Profit Beat the Street Estimates
Target Corp.’s Q-2 sales and profit beat estimates on Wednesday, helped by strong online sales and higher customer visits that grew the most in a 10 years, shares are trading nearly 5% higher as of this writing
The Minneapolis-based retailer also raised its profit forecast for the year after comparable sales including stores and online grew the most in 13 years.
Rising wages, lower unemployment and tax cuts have put more money in US consumers’ wallets this year spurring them to shop more. That translates to rising sales for retailers including Target.
It cut its next-day delivery fee for household essentials to $2.99 from $4.99 and is rolling out a new drive-up service where shoppers can pick up orders in an hour.
Target is also expanding its delivery services through Shipt, a same-day delivery company it bought for $550 million last year, and partnering with courier services on same-day orders in metro areas.
The retailer has said it plans capital expenditure of $3-B this year on its supply chain, online delivery, its own brands and merging online and in-store shopping. In February last year, the retailer said it would reinvest more than $7-B through Y 2020.
Q-2 same-store sales at Target were higher than estimates, rising 4.9%. Analysts expected a 3.99% increase, according to Thomson Reuters I/B/E/S. Customer traffic at its stores grew 6.4%.
Online sales rose 41% in Q-2, up from a 32% rise a year ago and above the 28% rise in Q-1.
Excluding items, Target earned a profit of 1.47/share in the Quarter ended 4 August higher than the average analyst estimate of 1.40.
Margins continued to remain under pressure from investments in e-commerce. The Q-2 gross margin rate was 30.3%, compared with 30.4% during the same frame in Y 2017.
Revenue rose to $17.78-B, topping the average Street estimate of $17.31-B.
Shares of the Minneapolis-based chain have risen more than 27% YTD, and over 47% Y-Y
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