Target’s comps and net sales slipped in the second quarter, and the retailer lowered its comparable sales outlook for the rest of the year.
For the second quarter ended July 30, Target Corp. posted diluted net earnings of $680 million compared with $753 million in the year-prior period, while diluted earnings per share from continuing operations came in at $1.07 versus $1.21 in the fiscal 2015 frame.
Net earnings per share, which include results from discontinued operations, were $1.16 versus $1.18 in the prior year quarter. Adjusted diluted earnings per share from continuing operations were $1.23 versus $1.22 in the quarter last year.
Target earnings per diluted share from continuing operations beat an analyst average estimate of $1.12 but sales came in slightly short of Wall Street expectations.
Comparable sales slipped 1.1%, on a 2.2% decrease in number of transactions partially offset by a 1.1% increase in average transaction amount. Digital operations added half a percentage point to comps, according to Target, and came in at 3.3% of overall sales, up from 2.7% in the quarter a year prior. Overall sales were down 7.2% to $16.17 billion in the quarter year over year, compared with $17.4 billion in sales in last year’s second quarter.
The company lowered its expectations for comparable sales in the second half of the year. In both the third and fourth quarters of 2016, Target now expects comparable sales growth in the range of down 2% to flat.
“While we recognize there are opportunities in the business, and are addressing the challenges we are facing in a difficult retail environment, we are pleased that our team delivered second quarter profitability above our expectations,” said Brian Cornell, chairman and CEO of Target. “Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in signature categories, store experience, new flex-format stores and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time.”
Target operates 1,797 stores and Target.com.
