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Target is luring back inflation-weary shoppers.
Sales at the retail giant grew 2% from a year ago in the second quarter, the company said early Wednesday. That’s a strong reversal from a 4% decline in sales in the first quarter, as Target struggled in the inflation economy.
“We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating margins and growing [earnings per share, or EPS] by more than 40% compared to last year,” Target chief executive Brian Cornell said in a statement.
Target’s adjusted EPS grew to $2.57, up 40% year-over-year. The results sent the retailer’s stock soaring more than 13% in morning trading Wednesday.
Cornell attributed the growth to in-store traffic and digital channels, including double-digit increases in Target’s same-day delivery services. Target saw upward trends in discretionary spending, particularly in apparel and beauty, the CEO said.
A recent slowdown in discretionary spending from consumers in the first half of this year resulted in a downturn for in-person shopping at retailers across the board, including Target. The retailer’s solution to that problem? Improving its in-store experience, and making deliveries faster and more convenient for shoppers, Christina Hennington, Target’s chief strategy and growth officer, said at a conference in July.
In May, Target announced plans cut prices on almost 5,000 everyday items during the summer. The retailer said it had already cut prices on 1,500 items, including vegetables, peanut butter, and coffee.
These changes were reflected in a glowing balance sheet. In all, the retailer brought in $25.5 billion in the second quarter, 2.7% higher than last year. Its operating income grew 36.6% from last year to $1.6 billion.
Despite the growth, Target issued cautious guidance for the rest of the year. For the third quarter, the retailer expects flat to 2% growth in comparable sales, and an adjusted EPS of between $2.10 to $2.40 — well below what it saw this quarter.
Through the end of 2024, the company expects sales growth of about 1%. But based on “strong profit performance in the front half of the year,” Target said raised its adjusted EPS guidance to $9.00 to $9.70, from the range of $8.60 to $9.60.
—Francisco Velasquez contributed to this article.