Target Corp. (TGT) saw its best comparable sales growth in 13 years, posting a 6.5% increase in the second quarter of this year.
Target’s strong performance follows similar results from rival Wal-Mart Stores, Inc. (WMT), which reported its fastest sales growth in a decade. Target, Walmart and other retailers are benefiting from a strong economy and retail environment. Consumer confidence reached a 17-year high in July, according to Bloomberg Consumer Comfort Index.
Target’s quarterly sales and profit beat analysts’ expectations of $1.40 earnings per share, reporting adjusted earnings per share of $1.47. Total revenue for the quarter rose 6.9% to $17.8 billion from the same time last year. The strong results sent shares up 5% Wednesday morning to a new high.
“Target hit the bullseye in Q2, with improvement across virtually every meaningful measure,” wrote Charlie O’Shea, Moody’s lead retail analyst.
Traffic to Target stores jumped 6.4% — the strongest growth since the company began reporting traffic in 2008. Digital sales posted comparable growth of 41% , which contributed to 1.5% of the company’s total comparable sales.
“We are extremely pleased with Target’s second quarter results, which demonstrate our guests’ excitement for the enhanced and differentiated shopping experience we’re building,” said Brian Cornell, Target CEO, in a press statement.
Outlook is bright
Target raised its 2018 outlook, saying it now expects comparable sales growth to be in-line with the first half of the year at 4.8% The company increased its full-year forecast to a range of $5.30 to $5.50 per share from $5.15 to $5.45 per share.
“The raising of guidance for the back half of the year is consistent with our view that there are macroeconomic tailwinds that can be exploited by the strongest, most financially flexible retailers that are hitting on all cylinders, with Target definitely in that class,” said O’Shea.
Target has been vying for market share from other retail giants like Amazon.com, Inc. (AMZN) and Wal-Mart by investing heavily in omni-channel technology and refurbishing existing stores. In the second quarter, the company made capital investments of $1.02 billion in property and equipment, that’s on top of the $827 million spent in the addition to the first quarter.
Target is on track to remodeling 300 stores and will be opening 30 new ones this year. So far, the retailer completed the remodeling of 56 stores, introduced three new brands, launched its new drive-up service in more than 250 stores and rolled out same-day delivery from 700 stores, thanks to its recent acquisition of Shipt. The company also now has free two-day shipping on hundreds of thousands of items, to directly compete against Amazon Prime.
“We laid out a clear strategy at the beginning of 2017, and throughout this year we’ve been accelerating the pace of execution,” said Cornell.
Maylan Studart is a reporter at Yahoo Finance.