Specifically, Target said it now expects to report a modest increase in second quarter comparable sales and adjusted EPS above the high end of its prior guidance range of $0.95 to $1.15.
Its revised earnings outlook is above analysts’ average expectation and it will reflect a $0.05 to $0.09 per share benefit driven by the net tax effect of its global sourcing operations while excluding $0.02 to $0.03 per share of income tax expense related to an unfavorable resolution of tax matters.
Following its first quarter report in May, Target said it was projecting a low-single digit decline for second quarter comparable sales.
The impetus for the upbeat guidance was broad-based improvement in traffic and category sales trends in the second quarter. That is noteworthy since the competitive environment has remained challenging and investor sentiment has been plagued by incessant press reports highlighting Amazon’s (AMZN 1006.51) sales dominance at the expense of many other retailers.
Amazon has been dominating, but apparently, Target stood its competitive ground in the second quarter. That understanding has also helped give a boost this morning to shares of Walmart (WMT 73.94), which competes directly with both Target and Amazon.
Target’s management said the company will be rolling out new exclusive brands across Home and Apparel in the next few months and that it has been pleased with the initial results of its next-day delivery initiative in the Twin Cities.
Investors are clearly pleased this morning with what they have heard from Target. The company still has room to improve, yet it appears to have been on point with its business plan in the second quarter and its stock is seeing the benefits of that focused effort.