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The executives of Target Corp. cited omni-channel efforts as a catalyst for strong retailer results for the second quarter of fiscal 2019, including earnings per share 20 cents higher than the Wall Street forecast.
For the quarter ended August 3, net earnings were $ 938 million, or $ 1.82 per diluted share, compared with $ 799 million or $ 1.49 per diluted share a year ago. Target said Wednesday. Adjusted EPS was also set at $ 1.82 for the 2019 quarter, compared to $ 1.47 for the same period last year, which corresponds to a tax adjustment on the result of two cents per share.
Analysts had average adjusted second quarter EPS of $ 1.62, with estimates ranging from $ 1.57 to $ 1.72, according to Refinitiv / Thomson Reuters.
"Our profitability in the second quarter was well above our expectations," said Brian Cornell (left), chairman and chief executive officer, to analysts at a conference call on Wednesday. "Our company achieved double-digit growth in operating income, which translated into record earnings per share and more than 20% growth in earnings per share over the past year. "
The second quarter of fiscal year 2019 revenue was $ 18.42 billion, up 3.6% from $ 17.78 billion ago year, reflecting gains of 3.4% of sales and 6.3% of other revenues. Comparable sales increased 3.4%, combined with the contribution of non-mature stores. Digital product sales jumped 34 percent and contributed 1.8 percentage points to overall sales growth, Target said. Operating profit increased 16.9% to $ 1.32 billion from $ 1.13 billion in the 2018 quarter.
"On the financial side, our business recorded a 3.4% growth in comparable sales in the second quarter, driven mainly by traffic. This growth added to an exceptionally strong growth of 6.5% in the second quarter of last year, which means that our sales have increased by about 10% since 2017, our best two-year performance for more than ten years. years, "said Cornell at the call.
"Among our sales channels, comp sales in the second quarter increased by 1.5% in our stores and by 34% in our digital channels. In our main categories of merchandising, we saw a growth of more than 5% in the composition of clothing and essential products, "he explained. "This reflects the overall value we bring in all of our categories and the balance we have achieved between our more discretionary areas such as home and the beauty of clothing and our less discretionary categories of food and beverage and essential categories, which have generated constant traffic throughout the year. "
Target has completed 84 store renovations in the second quarter and is expected to complete about 300 this year, Cornell added.
In late July, Target announced a expansion of the selective collection Drive Up at more than 1,500 stores, making the service available for the first time in Massachusetts, Rhode Island, Maine and New Hampshire. The previous month, Target made a delivery the same day from its subsidiary Shipt available directly on Target.com.
"On our digital channels, we continue to see the fastest growth of our same day delivery options, Drive Up and Shipt, in-store, which have more than doubled their sales over the past year," said Cornell. . "These options offer speed, convenience and reliability and, as a result, quickly become the preferred choice of our customers. Most importantly, because these options leverage our store infrastructure technology and our teams, same-day processing also delivers exceptional financial performance. "
Target provides order fulfillment service in all of its 1,851 stores. The company aims to have Drive Up in most of its stores by the end of 2019. Same day delivery is now available in more than 1,500 stores in more than 250 markets.
Chief Operating Officer John Mulligan said Target's results and net income for the quarter "provided further evidence of the return on investment we are making" on investments in an omni-channel business model.
"One of the places where it's easy to see the impact of our new model is digital fulfillment, where the combination moves dramatically to our same-day services, in-store pickup, Drive Up and Shipt" said Mulligan during the call. "In the second quarter, these three services accounted for more than a third of our digital sales, compared to about 20% last year. In other words, our same day options are growing much faster than our digital sales. Specifically, combined sales of Drive-Up and Shipt in-store purchases more than doubled from last year, accounting for nearly three-quarters of Target's 34 percent digital mix in the second quarter.
"This means that nearly 1.5% of the overall growth of the company was driven by our services the same day. These statistics are remarkable and demonstrate the speed with which our customers discover and adopt these new practical options, "he said. "For many customers, they are becoming the preferred choice for their online shopping because they offer unique benefits."
On the strength of its quarterly performance, Target, based in Minneapolis, has raised its guidance for the full year under GAAP and Adjusted EPS (continuing operations) from $ 5.90 to $ 6.20, compared to its previous outlook of $ 5.75 to $ 6.05.
Prior to the release of Target's results, Wall Street's consensus forecast was for adjusted EPS of $ 5.93, with projections ranging from $ 5.76 to $ 6.05, according to Refinitiv / Thomson Reuters.
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