Target's focus on lower prices in the grocery aisle start to pay off
Target’s comparable sales rose for the first time in a year as grocery aisle deals for cash-strapped customers began to pay off
NEW YORK — Target’s comparable sales rose for the first time in a year as grocery aisle deals for cash-strapped customers began to pay off.
Sales at stores and digital channels operating over at least the past 12 months rose 2% in the second quarter reversing months of declines, including a 3.7% drop in the previous quarter, and a 4.4% decline during the company’s final quarter of last year.
The number of transactions at the Minneapolis retailer increased 3% compared with the same period last year, with all six main merchandising categories, including fashion and home goods, showing strength. Online sales rose 8.7% and comparable sales in clothing increased 3% compared with a year ago as customers embraced new store brands like All in Motion and Wild Fable.
Target's profits and sales beat Wall Street expectations and the company increased its annual profit outlook, but said sales this year could come in at the low end of its guidance for unchanged to a 2% increase.
Shares spiked 13% before the opening bell Wednesday.
“We are seeing an incredibly resilient consumer in the face of high inflation,” Target’s CEO Brian Cornell said. “They are looking for newness, but they are also shopping, looking for value.”
More than 50% of Target’s annual sales come from discretionary items like toys, fashion and electronic gadgets. That had become problematic with Americans laser focused on necessities like groceries after a run-up in inflation after the pandemic.
To boost sales, Target said this spring that it would cut prices on thousands of necessities ranging from diapers to milk.
And it's rolling out
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