Target (TGT) saw its shares soar 15% in premarket trading Wednesday after the retailer reported better-than-expected second-quarter earnings and revenue, while also raising its full-year profit outlook.
The Minneapolis-based company posted adjusted earnings per share of $2.57, surpassing analysts’ estimates of $2.19. Revenue for the quarter came in at $25.45 billion, beating the consensus forecast of $25.2 billion and representing a 2.6% YoY increase.
Comparable sales grew 2% in the second quarter, driven by a 3% increase in traffic. Digital comparable sales rose 8.7%, with same-day services experiencing double-digit growth.
Target’s operating income margin rate improved to 6.4%, up 160 basis points from the previous year, primarily due to a higher gross margin rate.
“We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating margins and growing EPS by more than 40% compared to last year,” said Brian Cornell, chair and CEO of Target Corporation (NYSE:).
The company raised its full-year earnings guidance, now expecting adjusted EPS between $9.00 and $9.70, up from the previous range of $8.60 to $9.60. However, Target anticipates comparable sales growth for the year to be in the lower half of its previously stated 0% to 2% range.
For the third quarter, Target forecasts comparable sales growth of 0% to 2% and adjusted EPS between $2.10 and $2.40.
The retailer noted improving trends across discretionary categories, with apparel comparable sales growing more than 3% in the quarter. Target also reported continued strength in its beauty segment.