Target Q2 Sales Down

The second quarter proved to be challenging for Target as the retailer reported a drop in sales for the three-month period ended July 29.

Total revenue was $24.8 billion, down 4.9% year-over-year. Comparable sales were down 5.4%, reflecting a 4.3% drop in same-store sales and a 10.5% drop in comparable digital sales. Net earnings were $835 million, up from net earnings of $183 million in the comparable quarter the previous year.

"Our second quarter financial results clearly demonstrate the agility of our team and the resilience of our business model, as we saw better-than-expected profitability in the face of softer-than-expected sales,” said Brian Cornell, chair and CEO at Target. “With the benefit of a much-leaner inventory position than a year ago, the team was able to quickly respond to rapidly-changing topline trends throughout the second quarter, while continuing to focus on the guest experience."

While overall comparable store sales were down, the retailer reported growth in several categories including Essentials & Beauty, and Food & Beverage. Same-day services were also up nearly 4%, with Drive-Up reported a nearly 7% increase.

Inventory at the end of the second quarter was 17% lower than last year, reflecting a 25% reduction in discretionary categories, partially offset by inventory investments to support frequency categories, and strategic investments to support long-term market-share opportunities

Heading into the fall, Cornell said the company is taking a cautious approach to planning its business and adjusted guidance in anticipation of what he said was continued near-term challenges to its topline. 

As a result, the company now expects comparable sales to decline mid-single digits for the remainder of the year. Additionally, Target officials also expect full-year GAAP and Adjusted EPS of $7.00 to $8.00, compared with the prior range of $7.75 to $8.75.