In reviewing the second quarter, Target acknowledged its impressive gains represented a continuation of heightened sales volume as well as investments in response to the COVID-19 pandemic, but the company emphasized that, despite e-commerce strength, its stores were key in the period.
Target posted net earnings of $1.69 billion, or $3.35 per diluted share, versus $938 million, or $1.82 per diluted share, in the year-earlier quarter. Adjusted diluted earnings per share were $3.38 versus $1.82 in the period a year prior. Target topped a MarketBeat-published second quarter analyst consensus estimate of $1.64.
Company comparable sales grew 24.3% in the quarter year over year, based on a store comp advance of 10.9% and digital sales growth of 195%. Total revenue increased 24.7% versus the year-prior quarter to $23 billion as sales grew 24.8% to $22.7 billion. Operating income advanced to $2.3 billion from $1.32 billion in the 2019 period.
In a conference call, Target chairman and CEO Brian Cornell said stores drove more than 90% of second quarter sales gains and enabled three-quarters of digital sales. He pointed out that, due to their curated merchandising assortments, store locations set the tone for online purchasing in such a way that makes the e-commerce operation more efficient via store fulfillment. In the second quarter, sales fulfilled through drive-up grew 734%, with sales through Shipt up 350% and sales through in-store pickup up more than 60%, Cornell said.
In terms of merchandising categories, he said that home sales grew more than 30%, with decor, domestics and kitchenware standouts. Hardlines was especially strong, driven by electronics, and apparel made a sharp turnaround from first quarter losses to significant year over year profits in the second.
Cornell said, “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. 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.”