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Target Corp.
TGT -2.90%
reported increased revenue in the second quarter as more people returned to stores and online spending moderated compared with last summer, when the Covid-19 pandemic upended shopping habits.
The retailer said comparable sales, which include in-store and online purchases, for the quarter rose 8.9% from a year earlier, when they jumped 24.3% because people stocked up on groceries and because many other retail chains were temporarily closed.
Most of the growth in the latest quarter was driven by purchases of apparel, food and other items at the chain’s stores. Foot traffic rose 12.7% for the quarter. Digital sales increased 10%, after nearly tripling in the second quarter of 2020.
“We believe that America still embraces stores, and the traffic we’re seeing tells us that stores continue to play a very important role,” Chief Executive
Brian Cornell
said on a conference call.
The report comes a day after larger rival
Walmart Inc.
WMT -0.03%
reported strong in-store sales and foot traffic. Results from both chains—which sell groceries, added curbside services and stayed open throughout the pandemic—showed little impact from the recent rise in Covid-19 cases in the U.S.
Target’s quarterly sales and profits topped Wall Street’s expectations, and it projected comparable sales for the second half of its fiscal year near the high end of its previous forecast.
Target executives said during the conference call that the Delta variant’s spread hasn’t yet resulted in changes to consumer behavior, but they are closely monitoring the situation. “The second half of the year will likely continue to be volatile, particularly with the uncertainty caused by the Delta variant,” Mr. Cornell said.
Target has said it is working with vendors and transportation partners to dodge volatility in the global supply chain, which has snarled ocean freight, leading to cost increases for such products as toys ahead of the holiday shopping season.
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“Our inventories are up well over $2 billion versus last year, and so we feel really good about being positioned to support the fall and positioned to support the holiday season,” Chief Financial Officer
Michael Fiddelke
said during the conference call.
Consumer spending surged earlier this year as Covid-19 restrictions eased and more people got vaccinated, but spending cooled in July. Retail sales excluding autos were down 0.4% in the month compared with June, according to the Commerce Department. Sales dropped in categories including clothing, furniture and sporting goods.
Target reported $25.2 billion in revenue in the July-ended quarter, up 9.5% from a year earlier. It reported net earnings of $1.8 billion, up from $1.7 billion a year earlier. The company said it had adjusted earnings per share of $3.64 in the latest quarter, beating Wall Street’s estimate of $3.51 a share.
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