Target (TGT.US) announced its second-quarter results. The earnings report showed that Target’s Q2 total revenue was $26.037 billion, a year-over-year increase of 3.5%, falling short of market expectations; net profit was $183 million, plummeting 89.9% year-over-year; diluted earnings per share were $0.39, below market expectations, compared to $3.65 in the same period last year.
Comparable sales growth for the second quarter was 2.6%, lower than the market expectation of 2.8%; comparable store sales increased by 1.3%, while digital comparable sales grew by 9.0%. Strong-performing product categories during the quarter included food and beverage, beauty, and household essentials.
The operating profit margin was 1.2%, reflecting pressure on gross margins due to efforts to reduce excess inventory and rising transportation costs. Gross margins were also pressured by rising worker wages, an increase in distribution center staff, costs associated with managing excess inventory, and higher last-mile transportation costs.
As of the end of the second quarter, under the repurchase plan approved by the board last year, the company had approximately $9.7 billion in remaining repurchase authorization.
Looking ahead, Target still expects full-year revenue to achieve mid-to-low single-digit growth, with an operating profit margin of about 6% in the second half of the year.
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