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Target Corp. added to the evidence of a retail slowdown after COVID-19 highs, reporting the second-quarter rate of sales growth that slowed, though results beat expectations.
The discount retailer’s stock fell 3.6% in premarket trading Wednesday.
Target’s
TGT,
second-quarter net income totaled $1.82 billion, or $3.65 per share, up from $1.69 billion, or $3.35 per share, last year. Adjusted EPS of $3.64 beat the FactSet consensus for $3.51.
Revenue came in at $25.16 billion, up 9.5% from $22.98 billion last year and also ahead of the FactSet consensus for $24.99 billion, following 23.3% growth in the first quarter. Same-store sales growth of 8.9% was ahead of the FactSet consensus for 8.8%, following a 22.9% rise in the first quarter.
Digital comparable sales were up 10%, with same-day services such as order pickup and Drive Up popular with customers.
More than 95% of Target’s second-quarter sales were fulfilled by stores, and more than half of all Target customers used one of the company’s same-day services to fulfill their digital order.
Read: Dow, S&P 500 snap run of record highs as stocks end lower after disappointing retail sales
For the second half of the year, Target expects comparable sales to grow in the high-single digit range, on the high end of previous guidance.
Target’s board has authorized a new $15 billion share repurchase program. Buybacks under this new program will begin with the previous program, authorized in 2019, is complete. There was $1.8 billion remaining in that previous program at the end of the second quarter.
While the results beat expectations, they also provide further evidence of a shopping slowdown from COVID-19 highs. Same-store sales during the same period last year rose 10.9%. Digital comparable sales soared 195% in 2020.
On Tuesday, Walmart Inc.
WMT,
reported earnings and sales that missed expectations, but digital sales growth dropped to 6% after nearly doubling the previous year.
And Home Depot Inc.
HD,
missed on same-store sales for the most recent quarter.
Retail sales data also showed a 1.1% decline for the month of June as shoppers headed out to restaurants, events and took vacations rather than purchased goods.
Target Chief Executive Brian Cornell described a “healthy and resilient customer” on a call with media, noting “no adjustment in consumer behavior through the new [delta] variant.”
And back-to-school and back-to-college are off to a strong start, which has persisted into the third quarter.
“They continue to shop stores and all categories,” he said.
Target stock has gained 44.3% for the year to date while the S&P 500 index
SPX,
is up 18.4% for 2021 so far.
