Back to school shopping in a Target store in West Hollywood, California.
Joe Scarnici | Getty Images
Target said on Wednesday that profits jumped 17% during the second quarter as store pickup and freight services on the same day drew more customers, increasing the outlook for the rest of the year.
Sales of the company's stores that have been open for at least one year grew 3.4% during the quarter, and also exceeded expectations. Target said same-day fulfillment services, including order pick-up, drive-up and Shipped delivery operations on the same day, contributed nearly 1
Target's shares rose 15% in trading on the premarket, in line with the record high.
Here is what Target reported for the fiscal second quarter ended August 3 compared to what analysts expected, based on Refinitive data:
- Earnings per share: $ 1.82 versus $ 1.62 expected  Revenue: $ 18.42 billion compared to expected $ 18.34 billion
- Same store sales: up 3.4% versus 2.9% growth expected
Target and rivals look for ways to do shopping more convenient. To compete with Amazon, they are improving their online stores and trying to ship faster. They also bet that consumers do not mind visiting stores, especially when it is faster than waiting for delivery.
"By appealing to buyers through a compelling selection, a package of convenience-driven fulfillment options, competitive pricing and a pleasant shopping experience, we increase Targe's relevance and deepen the relationship between our guests and our brand," Target CEO Brian Cornell said in a statement .
Net income rose to $ 938 million, or $ 1.82 per share, compared to $ 799 million, or $ 1.49 per share, the previous year. It was SEK 20 better than expected for earnings per share of $ 1.62, based on Refinitive data.
Total revenues grew 3.6% to $ 18.42 billion from $ 17.78 billion the year before, topping $ 18.34 billion.
Sales in Target stores open for at least 12 months and from the site were up 3.4%, better than expected 2.9% growth. One year earlier, sales of the same store increased by 6.5%. Target said traffic increased by 2.4% during the last quarter. Digital sales increased by 34%, down from a 42% increase in the first quarter.
Like Walmart, Target is expected to see something of a sales bump around Amazon's 48-hour Prime Day event in early July.
Cornell said the company had "outstanding performance" during the first half of 2019, giving it "confidence" to raise expectations. Target now requests that adjusted earnings per share fall within a range of $ 5.90 to $ 6.20, up from a previous range of $ 5.75 to $ 6.05.
"Traffic and sales continue to grow," Cornell said.
Target's report comes on the heels of major rival Walmart, which reported last week on revenue that exceeded expectations and lifted the outlook for the year despite the ongoing threat of further tariff effects amid the US trade war with China.
Analysts have largely expected Target to continue to see sales gains in the same store, while other retailers like department store chains are struggling to get traffic. Target also experienced a record breach during the last quarter, but that was not enough to weigh on sales revenue.
Target this week announced the launch of a new grocery line, Good & Gather, which marked Dato's largest private label venture. The retailer has invested heavily in hatching its own brands. It has also been investing in store remodeling, open space in small formats in larger metros such as New York and rolling out on-street collection for online orders.
The target shares are more than 30% this year.