Same-store sales gain sets record in quarter
The retailer said its results reflect the continuation of heightened sales volume due to the COVID-19 pandemic. Target reported GAAP earnings per share (EPS) from continuing operations of $3.35 in the second quarter, an increase of 84.4 percent from $1.82 in 2019. Second-quarter adjusted EPS of $3.38 grew 85.7% compared with $1.82 in 2019.
“Our second-quarter comparable sales growth of 24.3% is the strongest we have ever reported, which is a true testament to the resilience of our team and the durability of our business model,” Target chairman and CEO Brian Cornell said in a statement. “Our stores were the key to this unprecedented growth, with in-store comp sales growing 10.9% and stores enabling more than three-quarters of Target’s digital sales, which rose nearly 200%. We also generated outstanding profitability in the quarter, even as we made significant investments in pay and benefits for our team.
“We remain steadfast in our focus on investing in a safe and convenient shopping experience for our guests, and their trust has resulted in market share gains of $5 billion in the first six months of the year. With our differentiated merchandising assortment, a comprehensive set of convenient fulfillment options, a strong balance sheet, and our deeply dedicated team, we are well-equipped to navigate the ongoing challenges of the pandemic, and continue to grow profitably in the years ahead.”
Second-quarter operating income margin rate was 10% in 2020 compared with 7.2% in 2019, driven primarily by strong expense leverage on robust topline performance. Second-quarter gross margin rate was 30.9%, compared with 30.6% in 2019. This increase reflected sales strength across our entire multi-category assortment and lower discounts driven by high sell-through rates. The second-quarter SG&A expense rate was 19.4% in 2020, compared with 21.2% in 2019, reflecting higher compensation costs, including investments in wages and benefits, which were more than offset by the net impact of other factors, most prominently the leverage from strong sales growth.