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Author: Alan LittleDate: 2021-08-19

Target (TGT) -2% despite back-to-school boost to Q2 earnings

US retailer Target (TGT) traded lower in New York in midweek despite posting Q2 earnings and revenue beats and forecast for high single-digit sales growth for H2 2021.

Target (TGT) was the latest US retailer to report on Wednesday, but its top and bottom-line beats weren’t enough to excite investors as its shares fell 2% in trading on the New York Stock Exchange.

Like Walmart (WMT) earlier this week, Target delivered growth in a number of key areas with all of its merchandise categories, including clothes and groceries, seeing a sales rise in fiscal Q2.

This helped the Minnesota-based company to post $3.64 earnings per share for the three months to 31st July, which was 15 cents ahead of the Wall Street consensus.

Total revenue also eased past the $25.08bn forecast at $25.16bn after rising 9.5% year-over-year as shoppers returned to stores.

Target now expects comparable sales to jump by up to 9% during the final six months of the year, which is better than its previous, more conservative guidance.

CEO Brian Cornell noted that parents were driving demand for goods including backpacks and uniforms in preparation for a return to schools following a lengthy period of home learning.

He added that the COVID-19 Delta variant had not resulted in “any adjustment in consumer behaviour”, though Target is monitoring the situation carefully.

Its pickup and home delivery services are also thriving after same-day transactions soared 55% in Q2.

After a strong quarter, CFO Michael Fiddelke said that the forecast for higher sales growth was indicative of the confidence in “Target’s ability to continue putting profitable growth on top of profitable growth – even in a volatile environment”.

Despite the optimism and the approval of a $15bn stock buyback plan, Target traded down on Tuesday with the 1.53% retreat by midday setting a new $250.75 price.

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