Target's turnaround showed further signs of gaining momentum on Wednesday as the retailer reported stronger-than-expected quarterly sales, received a major tariff refund and raised its full-year outlook.
Target reported adjusted earnings per share (EPS) of $2.46, beating the $2.35 expected, while revenue rose to $26.54 billion, above the $26.15 billion forecast.
Net sales increased 5.3% from a year earlier, while comparable sales climbed 3.8%, exceeding Wall Street's 2.4% estimate, according to StreetAccount. The retailer said it recorded “broad-based” strength across its categories.
Target's fiscal second-quarter net earnings received a $752 million boost, equivalent to $1.65 per share, from tariff refunds. The repayment also provided a $994 million pretax benefit to gross margin and operating income.
The retailer raised its full-year net sales growth forecast to about 5%, up from its previous guidance by one percentage point, citing stronger sales trends and the one-off tariff benefit.
Target now expects full-year adjusted EPS, including the tariff refunds, of $9.90 to $10.90. Excluding the repayment, the retailer expects EPS of $8.25 to $9.25, compared with its previous forecast of $7.50 to $8.50.
Target shares rose 4% on Wednesday.
For the three months ended August 1, Target reported net income of $1.88 billion, or $4.11 per share, compared with $935 million, or $2.05 per share, a year earlier. The comparison included the benefit from the tariff refunds.
Digital comparable sales jumped 8.7%, while same-day delivery increased more than 25%.
Target said all six of its major categories recorded growth, with food and beauty among the strongest performers.
Apparel and home continued to lag, however, with executives saying they were focused on improving performance in those segments.
The retailer has also cut prices on more than 10,000 products, with additional reductions planned, as it seeks to bring customers back to its stores. Target opened 17 new stores during the quarter.
The company has been working to convince investors that its turnaround strategy can deliver sustained growth and restore its core customer base, as consumers remain under pressure from challenging macroeconomic conditions.
Last quarter, Target reported its first positive comparable sales growth in five quarters, rising 5.6%.
Target shares have gained more than 55% this year, giving the retailer a market capitalisation of about US$72.22 billion.
