Target increases outlook following strong Q2 report

Target’s comparable sales grew by 2% in the second quarter, and traffic grew 3% with all six of the company’s merchandising categories delivering traffic growth in Q2, the company reported in its earnings call Wednesday. 

Digital comparable sales were up 8.7% and same-day services experienced double-digit growth. 

The company’s GAAP and Adjusted EPS of $2.57 was up more than 40% for the quarter, compared to a year ago. 

“Among the drivers of our comp sales, we're pleased that our second quarter growth was driven entirely by traffic, reflecting the combined benefits of the multiple guest-focused initiatives we outlined in our financial community meeting back in March,” Target Chair and CEO Brian Cornell said during the earnings call. 

The company readjusted its full-year GAAP and Adjusted EPS outlook upward to a range of $9 to $9.70—that’s up from the previous range of $8.60 to $9.60.  

Target said it expects a 0-2% increase in comparable sales for the third quarter and GAAP and Adjusted EPS of $2.10 to $2.40. 

"We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating margins and growing EPS by more than 40% compared to last year. Importantly, our growth was driven entirely by traffic in stores and our digital channels, with double-digit growth in our same-day delivery services," Cornell said. 

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Cornell added that Target’s store and digital channels also experienced growth in Q2, reporting that the retailer saw high single-digit growth in digital comps and faster growth in same-day services, via Drive Up and the company’s loyalty program Target Circle 360. Both saw growth in the low teens, Cornell said. 

“Same-day services now account for more than two thirds of sales, with the biggest contribution from Drive Up, which generated sales of more than $2 billion in Q2 and more than $4 billion so far this year,” he said. 

The company also saw “continued momentum” in the loyalty program, a result of the relaunch of the program in the first quarter of 2024. The program now has more than 100 million members, 2 million of which were added in Q2.

“But our aspirations go well beyond growing our membership base,” Cornell said. “We redesigned Target Circle with a goal of increasing engagement among existing members, and we've already realized the benefits. For example, during our July Target Circle Week, about two thirds of our transactions were made by Target Circle members.”