Target surpassed Wall Street estimates for comparable sales in the second quarter and increased its annual profit outlook on Wednesday as more Americans visited its shops in search of affordable necessities and food.
Following a better-than-expected performance in the first half of the year, the large box retailer now projects 2024 profit in the range of $9.00 to $9.70 per share, up from its previous range of $8.60 to $9.60. This is due to strong sales and cost savings.
In order to draw customers who are coping with the sharp increase in groceries and loan rates over the last two years, Target has increased the range of products it offers by including everyday necessities as well as private-label food and home goods.
Over 5,000 common items, such as bread, soda, paper towels, and pet food, saw price reductions this summer from the Minneapolis-based retailer. With the majority of the 400 items in its “dealworthy” private-label basics line, priced around $10, the range debuted in February. Furthermore, it added 125 new food products to its “Good & Gather” and “Favorite Day” brands through expansion.
According to Brian Cornell, CEO of Target, customers reacted favorably to the “newness” and the price reductions.
Another encouraging development was the 3% increase in apparel sales during the quarter, which was driven by the private-label “All In Motion” and “Wild Fable” lines.
The company reported that overall, shopper visits increased by 3% during the quarter that concluded on August 3, with June and July seeing the largest increases in comparable sales. Compared to the 1.9% traffic decline in the previous quarter, this represented a turnaround.
Even after a minor drop, traffic was the primary driver of the second quarter’s 2% increase in comparable sales.
CEO Brian Cornell reported that customers reacted positively to the price reduction.