Target Shares Reach New Record High Following Stellar Q2 Earnings
The US' eighth-largest retailer, Target Corp, managed to beat initial analysts' forecast after it released its earnings report on Wednesday. The company was so confident with its results that it also upgraded its full-year outlook.
Target's better-than-expected results have been attributed to the company's heavy investments in its same-day delivery and pick-up services. The upgrade of its delivery systems has managed to increase traffic to its online and offline stores, bolstering its overall revenues.
The US retailer reported a 34 percent increase in its comparable digital sales for the quarter, bolstered mainly by its same-day services. The online sales account for more than half of the company's total same-store sales.
Target reported total revenues of $18.42 billion, a 3.6 percent increase over the same period last year. The company's revenue for the quarter was slightly higher than analysts' expectations of $18.34 billion. Target reported earnings of $1.82 per share, beating analysts' estimates by around 20 cents.
Riding on its stellar performance, Target announced that it has upgraded its full-year forecast. The company expects its full-year adjusted profit to be somewhere between $5.90 and $6.20 per share. This is a relatively significant increase from the company's prior forecast of $5.75 and $6.05 per share.
Target pointed out that its full-year forecast already takes into consideration the possible effects of the additional US tariffs likely to be imposed by US President Donald Trump on billions worth of Chinese imports.
Following the release of its second-quarter earnings, Target's stock prices jump by as much as 19 percent to a new record high of $102.02 per share. The company's stock price is already up by 29 percent this year.
In its attempt to keep up with rivals Amazon and Walmart, Target had made huge strategic moves in the previous months to upgrade its delivery systems.
Target recently acquired grocery delivery company Shipt, which was then utilized to offer same-day deliveries for Target's 65,000 grocery items.
Target revealed that since it had implemented its same-day delivery and pickup services, its user base had dramatically grown. One in five customers of its same-day service during the second quarter is reportedly a new user of its service.
Target has managed to bounce back from its troubled past right after retail veteran Brian Cornell took over as its chief executive in 2014. Cornell managed to turn around the company's dropping margins through a number of strategic transformations that saw the company remodel its stores over the years.