Target Corporation (NYSE: TGT) reported a 17% jump in earnings for the second quarter driven by strong traffic and comparable sales growth. The results exceeded analysts’ expectations. The company raised its earnings guidance for the full year 2019.
Net income from continuing operations climbed 17% to $938 million or $1.82 per share. Adjusted earnings advanced 24% to $1.82 per share. Total revenues increased 4% to $18.42 billion, reflecting sales growth of 3.6% combined with a 6.3% rise in other revenue. Comparable sales grew by 3.4% on traffic growth of 2.4%.
Comparable digital channel sales soared 34%, contributing 1.8 percentage points to Target’s overall comparable sales growth. Same-day fulfillment services accounted for nearly 1.5 percentage points of the company’s overall comps.
Looking ahead into the third quarter of 2019, the company expects comparable sales growth in line with the previous quarter. Target predicts both GAAP EPS from continuing operations and adjusted EPS of $1.04 to $1.24 for the third quarter. For fiscal 2019, the company raised its GAAP EPS from continuing operations and adjusted EPS guidance to the range of $5.90 to $6.20 from the previous estimate of $5.75 to $6.05.
For the second quarter, the gross margin rate rose to 30.6% from 30.3% a year ago, reflecting the benefit of merchandising efforts to optimize costs, pricing, promotions and assortment, combined with the benefit of favorable category sales mix. This favorability was partially offset by higher digital fulfillment and supply chain costs.
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Target completed 84 remodels across the country in the second quarter and is nearly halfway to its goal of remodeling about 300 stores this year. The investments in stores are elevating the guest experience and allowing Target to reach guests in new communities. The company opened four small-format stores in important growth markets.
Nearly one in five guests who placed a same-day order in Q2 were placing a digital order with Target for the first time. The total number of stores for the second quarter was 1,853, up from 1,835 in the previous year quarter.