Target Corp. TGT released its second-quarter results before the opening bell on Aug. 19. The retailer posted earnings and revenue beats thanks to robust digital and same-store sales.
Performance at a glance
Target's net income of $1.7 billion jumped 80.3% year over year, translating to GAAP earnings per share of $3.35. The company reported adjusted EPS of $3.38 per share, which topped analysts' estimates of $1.62. Revenue came in at $23 billion, surpassing expectations of $20.09 billion.
Same-store sales grew a record 24.3%, which was more than the anticipated increase of 7.6%. While the number of transactions surged 4.6% during the quarter, the average transaction amount soared 18.8% as compared to the same period last year.
Reflecting on the quarter, Chairman and CEO Brian Cornell said:
"Our second quarter comparable sales growth of 24.3 percent is the strongest we have ever reported, which is a true testament to the resilience of our team and the durability of our business model. Our stores were the key to this unprecedented growth, with in-store comp sales growing 10.9 percent and stores enabling more than three-quarters of Target's digital sales, which rose nearly 200 percent. We also generated outstanding profitability in the quarter, even as we made significant investments in pay and benefits for our team."
Digital sales
As a result of the pandemic, customers often refrained from going to the physical stores, which is why digital traffic and curbside pickup gained momentum during the quarter.
Comparable digital sales climbed a mammoth 195% during the quarter. The company said its curbside pickup service flourished during the quarter, up more than 700% as compared to the same period last year. The company gained around 10 million new digital customers in the first half of 2020.
Other growth contributors
Target's electronics category saw sales growth of more than 70% in the second quarter as customers bought office products and video games. While the food and beverage and essentials categories grew a combined 20%, home and beauty segments inched up more than 30% and 20%, respectively. Likewise, apparel sales grew by double digits after falling 20% in the previous quarter.
The big-box retailer's same-day services gained traction during the quarter, up 273% year over year. The same-day services permits customers to get ahold of the products they ordered online on the day of purchase.
Guidance
Target pulled its financial forecast for the remainder of the year.
Disclosure: I do not hold any positions in the stocks mentioned.
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