(TGT) on Wednesday reported a profit for the second quarter that more than tripled from last year, reflecting higher sales and improved margins.
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The upbeat report is evidence that efforts to spruce up fashions and other merchandise are paying off for chief executive Brian Cornell, who has led the company for a year with marching orders to reinvent the “cheap chic” retailer after a series of problems.
Cornell is also reshaping his management team.
The company notes that sales in its signature categories of style, baby, kids and wellness grew three times as fast as the rest of its sales. BMO Capital Markets cut shares of Target from an “outperform” rating to a “market perform” rating and set a $85.00 price target for the company.in a research report on Friday, June 26th. The stock had already gained 5.8 percent this year, outshining rival Wal-Mart Stores Inc., which has seen its shares decline 19 percent.
Target has been ramping up its investment in its online and mobile operations as it pulls back on building new, large-format stores. “While the momentum in our financial results is encouraging, we have much more to accomplish”. Mulligan will assume oversight of stores, supply chain and properties. He will be replaced by Cathy Smith.
“Target historically has leaned on the side of under-ordering or under-allocating to keep inventory turns high”, said Neil Stern, senior partner at retail consultancy McMillan-Doolittle.
It has also recently announced to promote Chief Financial Officer John Mulligan to the position of Chief Operating Officer. This move was briefly spoken about during the call as aligning with Target’s plans to create better organizational flow to increase efficiencies, along with helping Target focus on growing its digital footprint by determining how its physical footprint can complement its digital channel growth. McMillon’s push to improve the store experience at Wal-Mart has included boosting worker pay and increasing staffing levels. Excluding special items, earnings rose to $1.22 per share in the second quarter ended on August 1 from $1.01 a year earlier.
Target now expects earnings of $4.60 to $4.75 a share for the current fiscal year, up from $4.50 to $4.65. During the same quarter in the prior year, the company earned $0.78 earnings per share.
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Second-quarter comparable sales growth of 2.4% was in line with the company’s expectations, driven primarily by growth in comparable transactions. He exited Canada and has reached a deal to sell off Target’s pharmacy business to CVS Health Corp. The total amount of the transaction was worth $4,233,581, according to the disclosed information with the Securities and Exchange Commission in a Form 4 filing.
