MINNEAPOLIS, Aug. 21, 2024 PRNewswire/ --
Second quarter comparable sales increased 2.0 percent, at the high end of the Company's expectations.
Traffic grew 3 percent in the second quarter as compared to the prior year, with all six core merchandising categories delivering traffic growth.
Digital comparable sales grew 8.7 percent. Same-day services saw double digit growth, led by low teens growth in Drive Up and Target Circle 360™ same-day delivery.
Discretionary sales trends continued to improve meaningfully, with Apparel comparable sales growing more than 3 percent in the quarter.
Second quarter operating income margin rate of 6.4 percent grew 160 basis points compared to the prior year, driven by a higher gross margin rate.
GAAP and Adjusted EPS of $2.57 grew by more than 40 percent compared with last year.
For additional media materials, please visit:https://corporate.target.com/news-features/article/2024/08/q2-2024-earnings
Target Corporation (NYSE:TGT) today announced its second quarter 2024 financial results, which reflected a return to topline growth and strong profit performance.
The Company reported second quarter GAAP and Adjusted earnings per share1 (EPS) of $2.57, compared with $1.80 in 2023. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.
1Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items, when applicable. See the tables of this release for additional information.
"We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating margins and growing EPS by more than 40% compared to last year. Importantly, our growth was driven entirely by traffic in stores and our digital channels, with double-digit growth in our same-day delivery services," said Brian Cornell, chair and chief executive officer of Target Corporation. "We also saw improving trends across our discretionary categories, most notably in apparel, and we're seeing continued strength in beauty. Looking ahead, even as we maintain the measured outlook that has served us well, we are focused on building on this positive momentum by executing our strategy and providing the unique combination of newness and value that consumers can only find at Target."
Guidance
For the third quarter, the Company expects a 0 to 2 percent increase in its comparable sales, and GAAP and Adjusted EPS of $2.10 to $2.40.
While the Company believes its full-year guidance range of a 0 to 2 percent increase in its comparable sales remains appropriate, it now believes the increase will more likely be in the lower half of that range. However, based on strong profit performance in the front half of the year, the Company now expects full-year GAAP and Adjusted EPS of $9.00 to $9.70, up from the prior range of $8.60 to $9.60.
Operating Results
Comparable sales increased 2.0 percent in the second quarter, reflecting a comparable store sales increase of 0.7 percent and a comparable digital sales increase of 8.7 percent. Total revenue of $25.5 billion in the second quarter was 2.7 percent higher than last year, reflecting a total sales increase of 2.6 percent and a 10.8 percent increase in other revenue. Second quarter operating income of $1.6 billion was 36.6 percent higher than last year, driven by sales growth and a higher gross margin rate.
Second quarter operating income margin rate was 6.4 percent in 2024, compared with 4.8 percent in 2023. Second quarter gross margin rate was 28.9 percent, compared with 27.0 percent in 2023, reflecting the net impact of merchandising activities, including cost improvements that more than offset higher promotional markdown rates, combined with favorable category mix and lower book to physical inventory adjustments as compared to the prior year, partially offset by higher digital fulfillment and supply chain costs. Second quarter SG&A expense rate was 21.2 percent in 2024, compared with 20.9 percent in 2023, reflecting the combined impact of higher costs, including continued investments in pay and benefits, partially offset by disciplined cost management.
Interest Expense and Taxes
The Company's second quarter 2024 net interest expense was $110 million, compared with $141 million last year, primarily driven by an increase in interest income reflecting higher cash balances year-over-year.
Second quarter 2024 effective income tax rate was 22.9 percent, compared with the prior year rate of 22.2 percent, reflecting higher pretax earnings and lower discrete benefits as compared to the prior year.
Capital Deployment and Return on Invested Capital
The Company paid dividends of $509 million in the second quarter, compared with $499 million last year, reflecting a 1.9 percent increase in the dividend per share.
The Company repurchased $155 million of its shares in the second quarter, retiring 1.1 million shares of common stock at an average price of $145.94. As of the end of the quarter, the Company had approximately $9.5 billion of remaining capacity under the repurchase program approved by Target's Board of Directors in August 2021.
For the trailing twelve months through second quarter 2024, after-tax return on invested capital (ROIC) was 16.6 percent, compared with 13.7 percent for the trailing twelve months through second quarter 2023. The increase in ROIC reflects higher operating income, partially offset by higher average invested capital. The tables in this release provide additional information about the Company's ROIC calculation.
Webcast Details
Target will webcast its second quarter earnings conference call at 7:00 a.m. CT today. Investors and the media are invited to listen to the meeting at Corporate.Target.com/Investors (click on "Q2 2024 Target Corporation Earnings Conference Call" under "Events & Presentations"). A replay of the webcast will be provided when available. The replay number is 1-866-405-7299.
Miscellaneous
Statements in this release regarding the Company's future financial performance, including its fiscal 2024 third quarter and full-year guidance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the Company's results to differ materially. The most important risks and uncertainties are described in Item 1A of the Company's Form 10-K for the fiscal year ended February 3, 2024. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement.
About Target
Minneapolis-based Target Corporation (NYSE:TGT) serves guests at nearly 2,000 stores and at Target.com, with the purpose of helping all families discover the joy of everyday life. Since 1946, Target has given 5% of its profit to communities, which today equals millions of dollars a week. Additional company information can be found by visiting the corporate website (corporate.target.com) and press center.
TARGET CORPORATION
Consolidated Statements of Operations
Three Months Ended
Six Months Ended
(millions, except per share data) (unaudited)
August 3, 2024
July 29, 2023
Change
August 3, 2024
July 29, 2023
Change
Sales
$ 25,021
$ 24,384
2.6 %
$ 49,164
$ 49,332
(0.3) %
Other revenue
431
389
10.8
819
763
7.4
Total revenue
25,452
24,773
2.7
49,983
50,095
(0.2)
Cost of sales
17,799
17,798
0.0
35,248
36,184
(2.6)
Selling, general and administrative expenses
5,392
5,184
4.0
10,560
10,209
3.4
Depreciation and amortization (exclusive of depreciation included in cost of sales)
626
594
5.3
1,244
1,177
5.7
Operating income
1,635
1,197
36.6
2,931
2,525
16.1
Net interest expense
110
141
(22.4)
216
288
(25.1)
Net other income
(20)
(16)
20.3
(49)
(39)
24.2
Earnings before income taxes
1,545
1,072
44.1
2,764
2,276
21.4
Provision for income taxes
353
237
48.7
630
491
28.2
Net earnings
$ 1,192
$ 835
42.7 %
$ 2,134
$ 1,785
19.6 %
Basic earnings per share
$ 2.58
$ 1.81
42.5 %
$ 4.62
$ 3.87
19.3 %
Diluted earnings per share
$ 2.57
$ 1.80
42.4 %
$ 4.60
$ 3.86
19.3 %
Weighted average common shares outstanding
Basic
462.5
461.6
0.2 %
462.4
461.3
0.2 %
Diluted
463.5
462.5
0.2 %
463.7
462.7
0.2 %
Antidilutive shares
2.3
2.9
1.8
2.4
Dividends declared per share
$ 1.12
$ 1.10
1.8 %
$ 2.22
$ 2.18
1.8 %
TARGET CORPORATION
Consolidated Statements of Financial Position
(millions, except footnotes) (unaudited)
August 3, 2024
February 3, 2024
July 29, 2023
Assets
Cash and cash equivalents
$ 3,497
$ 3,805
$ 1,617
Inventory
12,604
11,886
12,684
Other current assets
1,817
1,807
1,797
Total current assets
17,918
17,498
16,098
Property and equipment
Land
6,645
