Key Takeaways
- Target reports earnings ahead of markets opening Wednesday, Aug. 21, following encouraging retail sales data and earnings from retail rival Walmart this week.
- Analysts expect sales and profits to rise from the same time last year, as Target has lowered prices and cut costs to boost its sales and margins.
- JPMorgan analysts said earlier this month that they expect Target to lower the top range of its full-year earnings per share (EPS) projections.
Target (TGT) reports second-quarter fiscal 2024 earnings Wednesday morning, with analysts expecting rising sales and profits compared to last year amid an encouraging retail sales environment.
Analysts expect a modest sales bump to $25.21 billion from $24.77 billion in the second quarter of fiscal 2023, with profits projected to rise to $1.00 billion from $835 million a year ago.
Target has emphasized the importance of cutting costs in earnings reports over the last year to improve its sales margins, and the retailer has also worked to lower prices to boost sales.
| Analyst Estimates for Q2 2024 | Q1 2024 | Q2 2023 | |
| Revenue | $25.21 billion | $24.53 billion | $24.77 billion |
| Diluted EPS | $2.14 | $2.03 | $1.80 |
| Net Income | $1.00 billion | $942 million | $835 million |
Key Metric: Full-Year Outlook
The midpoint of Target’s projections for its full-year adjusted earnings per share (EPS) came in below expectations earlier this year, and JPMorgan analysts noted earlier this month that the retailer could be poised to “narrow down the top half of the range for both [comparable sales] and EPS.” Expecting a downward revision to pressure Target shares in the near-term, the analysts lowered their price target to $153 from $165.
The JPMorgan analysts said they also expect Target’s second-half margins to be harmed by more frequent promotions to help boost sales.
However, Baird analysts provided a more optimistic picture Monday compared to a “skeptical” market, writing that Target has “enough levers” to control its spending and affirm its $8.60 to $9.60 full-year adjusted EPS projection.
Business Spotlight: Encouraging Retail Backdrop
Positive retail sales numbers from the U.S. Census Bureau and better sales than expected from rival Walmart (WMT), each released Thursday, provided an encouraging environment for Target’s earnings. The positive retail news lifted Target shares Thursday along with those of Macy’s (M) and TJX Companies (TJX), both of whom will also report earnings on Aug. 21.
However, despite both posting earnings beats in the first quarter, Walmart and Target had diverging outcomes for their stocks following their reports. Both retailers highlighted how inflation was affecting customers’ habits, with spending focused on necessities amid a pullback on discretionary items. However, those trends appeared to benefit Walmart more than Target.
Target shares rose 4.4% Thursday to $141.67, less than 1% below where they started the year.