Shares of Target (NYSE: TGT) increased by more than 7% last week after the retail company provided investors with clear signs that its turnaround strategy is gaining traction.
Refocusing on value
Target is making a return to its discount origins, having cut prices on over 10,000 items in the past year. The company is also investing in redesigns for its stores and enhancing its product offerings.
This approach seems to be resonating well with shoppers.
In its fiscal second quarter, which concluded on August 1, Target reported a 5.3% increase in net sales, reaching $26.5 billion.
The retailer experienced sales growth both in-store and online, with improvements noted in all six of its primary product categories.
Comparable store sales, which track revenue from locations that have been open for at least 13 months, rose by 2.7%, attributed to a boost in customer traffic.
Meanwhile, digital comparable sales—reflecting orders made through Target’s website or app—rose by 8.7%, driven by a remarkable 25% uptick in same-day delivery services.
These increases in revenue, along with tariff refunds, resulted in Target’s adjusted earnings more than doubling to $4.11 per share. Excluding those tariff refunds, adjusted profits still grew by 20% year over year.
Raised guidance
The positive results led Target to revise its growth outlook upward. The company now anticipates a roughly 5% rise in full-year net sales, expecting adjusted earnings per share between $9.90 and $10.90.
“We’re pleased with another quarter of strong top-line growth and improving underlying profitability,” said chief financial officer Jim Lee in a call with analysts. “However, there’s still a lot of work left to unlock our business’s long-term potential.”
Should you buy stock in Target right now?
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