Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Target shares surge on same-day delivery boost

Stock MarketsAug 21, 2019 11:47AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. An empty shopping cart stands outside a target store during a Black Friday sales event in Westbury, New York

By Aishwarya Venugopal

(Reuters) - Target Corp (NYSE:TGT) beat expectations for earnings and raised its full-year outlook on Wednesday as its investments in same-day delivery and pick-up services increased traffic to its website and stores, sending shares 19% higher.

The retailer has spent billions of dollars on its push to compete with the ease of delivery provided by Inc (NASDAQ:AMZN) and Walmart (NYSE:WMT) Inc, buying grocery delivery firm Shipt, and building in-store pickup and drive-up services.

Target said one out of five customers who used its same-day service in the quarter were new, with shoppers collecting their orders from stores within a couple of minutes of placing them through the company's mobile app or website.

"Q2 could not have gone better for Target," Charlie O'Shea, a vice president at ratings agency Moody's, said of the results.

Led since 2014 by retail-industry veteran Brian Cornell, Target has bounced back from a slide three years ago which saw its margins drop, prompting a rethink that has seen it remodel hundreds of stores each year since.

Like Walmart it has refitted its business to deal with the challenge presented by Amazon and other online retailers, also developing its line of own-brand goods to boost profits.

Wednesday's results showed the company's same-day services drove more than three-fourths of a 34% increase in comparable digital sales in the quarter. Those online sales accounted for more than half of its total same-store sales.

"Because these options leverage our store infrastructure, technology and teams, same-day fulfillment delivers outstanding financial performance as well," Cornell told a post earnings call.

The company's stock, which had already risen 29% this year, jumped 19% to a record high of $102.02, driving gains in other retail players and adding to broad gains for Wall Street.


The quicker deliveries, Target executives said, also powered profitability as margins expanded for the first time in nearly three years, rising 30 basis points to 30.6% in the quarter.

That reflected a stronger product mix and optimization of pricing, the company said, at a time when Walmart's margins dropped 46 basis points. Macy's, Kohl's and J.C. Penney have all reported disappointing results in the past week.

"While many department store peers struggle to sustain positive traffic and stable gross margins, Target is finding the right balance," Evercore analyst Greg Melich said.

Target's comparable sales rose by a better-than-expected 3.4% as demand for apparel, toys and beauty products rose. Late in the quarter, the retailer also benefited from back-to-school promotions.

Its strategy of opening smaller locations in college towns and urban areas, and stocking more own-brand goods, helped store traffic grow 2.4%.

Earlier this week, the company said it was starting a new food and beverage brand, Good & Gather, that would hit stores in September.

Target expects full-year adjusted profit to be between $5.90 and $6.20 per share, up from the prior range of $5.75 to $6.05 per share. The outlook accounted for potential additional U.S. tariffs on Chinese imports.

Excluding certain items, it earned $1.82 per share, beating the average analyst estimate by 20 cents. Total revenue rose 3.6% to $18.42 billion, above expectations of $18.34 billion.

Target shares surge on same-day delivery boost

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email