Target Corporation announced a 3% increase in sales for its fiscal second quarter on Wednesday, marking a return to growth after a period of sluggish performance and tightened profits. The retailer exceeded Wall Street’s expectations for both earnings and revenue, as customers made more frequent visits to Target’s stores and website, purchasing more discretionary items such as clothing.
Despite this positive performance, Target maintained a cautious outlook for the full year. The company reiterated its forecast for comparable sales, predicting growth between flat and 2%, but noted that the increase will likely be in the lower half of that range. However, Target raised its profit guidance, expecting adjusted earnings per share to range between $9 and $9.70, up from the previous range of $8.60 to $9.60.
Target’s shares rose approximately 11% on Wednesday, reflecting investor optimism as the company showed signs of improved profitability. Chief Operating Officer Michael Fiddelke explained that the company’s measured approach to its outlook was due to uncertainties surrounding consumer behavior and economic conditions in the coming months.
“While we’ve been pleased with our performance so far this year, and our view of the consumer remains largely the same, the range of possibilities and the macroeconomic backdrop in consumer data and in our business remains unusually high,” Fiddelke stated.
For the quarter ending August 3, Target reported earnings per share of $2.57, surpassing the $2.18 expected by analysts. Revenue reached $25.45 billion, exceeding expectations of $25.21 billion.
Target has faced challenges as consumers cut back on discretionary spending and as lower-margin items like groceries dominate sales. The retailer also contended with reduced profits due to inventory shrinkage and organized retail crime. However, these issues improved in the second quarter, as Target attracted shoppers with new merchandise and strategic price reductions.
Net income for the quarter rose to $1.19 billion, or $2.57 per share, up from $835 million, or $1.80 per share, in the same period last year—a more than 40% year-over-year increase. Total revenue grew from $24.77 billion in the prior year, with comparable sales climbing 2%, the first gain in five quarters.
Digital sales were a significant driver, growing 8.7% in the quarter, largely due to increased usage of same-day services like curbside pickup and home delivery. Comparable store sales also saw a modest rise of 0.7%.
Target has actively sought to increase sales and foot traffic through deepened customer loyalty and discount initiatives. The company relaunched its loyalty program earlier this year introduced Target Circle 360, a paid membership offering perks such as free same-day deliveries.
