Target (NYSE:TGT) snapped a streak of four consecutive quarters of weaker same-store sales, as the retailer joined some of its peers in reporting better store traffic during the second quarter.
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Retailers including Target have struggled to stem a decline in sales tied to growing competition from Amazon.com (NASDAQ:AMZN) and other e-commerce companies. In order to boost sales, Target adopted a plan to invest in smaller stores, online product offerings and its grocery sections. Target plans to remodel more than 100 stores this year and at least 300 in 2018.
During a conference call with analysts, executives said the turnaround plan paid off in the last period. Same-store sales, which measure the performance of stores open at least a year, increased 1.3% during the three-month period ending July 29, topping Wall Street’s expectations. Target’s website contributed most of that growth, accounting for 1.1 percentage points. Comparable digital sales were up 32%. Store traffic improved by more than 2%.
Shares rallied 2.6% to $55.70 in recent trading. Target has dropped about 23% this year.
“We continue to focus on our long-term strategy, as we work to transform every part of our business and build an even better Target that will thrive in this new era in retail,” Target CEO Brian Cornell said.
Rivals Macy’s (NYSE:M) and Kohl’s (NYSE:KSS) also booked better same-store sales than expected for the second quarter. Kohl’s said there was a noticeable uptick in store traffic, a trend that accelerated through July. However, other retail giants such as J.C. Penney (NYSE:JCP) and Dick’s Sporting Goods (NYSE:DKS) have turned in disappointing results.
Target reported an overall profit of $1.23 per share in the quarter, beating Wall Street’s forecast by four cents. Net earnings fell 1.2% to $672 million. Sales also surpassed expectations, rising 1.6% to $16.43 billion.
The Minneapolis-based company now expects full-year adjusted earnings of $4.34 to $4.54 a share, compared to the consensus estimate of $4.39.