Target reported a record second quarter earlier Wednesday, with profits and comparable sales supported by market share growth and customer service options across its digital platform that drove shoppers to stores.
Net income totaled $1.69 billion, a record $3.35 per share, up from $938 million, or $1.82 per share, last year. Adjusted earnings per share totaled $3.38, also a record, and the FactSet consensus was for $1.63 per share.
Revenue totaled $22.98 billion, up from last year’s $18.42 billion and above FactSet’s outlook of $19.97 billion.
Comparable sales soared a record 24.3%, with digital comparable sales nearly tripling, up 195%, and comparable store sales up 10.9%. The retailer added 10 million digital customers in the first half of the year.
The results sent Target’s stock up 12.7 percent in Wednesday’s trading.
“In the current environment, we’re operating very well in every category,” Target CEO Brian Cornell said on a call with the media. According to Cornell, apparel saw the biggest turnaround, going from a 20 percent decline in the first quarter to double-digit growth in the second quarter.
Home is up more than 30 percent, and electronics is soaring more than 70 percent.
Market share gains for the first half of the year totaled $5 billion, the company said, calling the results “exceptionally strong” in its earnings release.
“We believe the company was able to gain significant share in the quarter, which strengthens our long-term view of the large share opportunity,” Raymond James wrote in a note.
Raymond James has a Strong Buy rating on Target stock.
“The bottom line is that Target has developed a cohesive proposition that means its guests will happily shop in multiple categories, allowing Target to maximize its share of wallet,” writes Neil Saunders, managing director of GlobalData Retail.
“It’s always been beneficial, but it’s coming into play at a time when consumers have been cutting back on their shopping excursions.Target’s position also contrasts with some of its competitors, such as Walmart, which has far less ability to get people to shop across multiple departments.”
The biggest change Cornell noted this quarter was the return of customers to its stores. In-store pickups increased more than 60 percent this quarter, and Drive Up, which puts items in customers’ cars, increased more than 700 percent.
Shipt that delivers merchandise to customers’ homes is up 350 percent over last year.
Target said more than 90 percent of its sales growth in the second quarter involved stores.
Target’s privately held grocery brand Good & Gather became a billion-dollar brand less than a year after it launched, joining other brands like children’s brand Cat & Jack and home brand Threshold.
Good & Gather will add hundreds of items to its lineup, Cornell said.
Unlike Walmart Inc.
, which talks a lot about the impact of the government’s financial stimulus on shoppers and business, Target is focused on areas like same-day fulfillment and its portfolio, which the company invested in before the coronavirus pandemic began.
“The stimulus was a factor, but we continue to see comp growth and we had a strong start to August,” Cornell said.
Cornell said comparable sales were up in the low double digits in early August and the back-to-school rush is starting to slow.Target expects the holiday season to start early and the company plans to perform strongly on Halloween, when customers will spend the holiday closer to home and focus more on costumes and home décor.
Looking ahead, Cornell said Target is preparing for “a tough election and a holiday season that will be like no other,” Cornell said. The company has suspended guidance in light of COVID-19-related uncertainty.
“As we reflect on an extraordinary second quarter, we know there is much work ahead,” he said.
Target’s stock is up 20.3 percent this year while the S&P 500 is up 20.5 percent.
It rose 4.5 percent during the period.