Target Corp.’s stock (TGT, -2.55%) experienced a remarkable 11% surge in premarket trade on Wednesday, following the retailer’s impressive earnings report for the second quarter. Despite a slight miss in sales and lower guidance, the company managed to exceed profit estimates by a wide margin.
Impressive Financial Performance
During the year-earlier period, Target reported a net income of $183 million, or 39 cents per share. However, in the second quarter of this year, the company’s net income skyrocketed to $835 million, or $1.80 per share. Adjusted per-share earnings also stood at an impressive $1.80, surpassing the FactSet consensus of $1.43.
Revenue Decline and Same-Store Sales
While Target’s revenue fell to $24.773 billion from $26.037 billion in the previous year, it slightly missed the FactSet consensus of $25.178 billion. Moreover, same-store sales saw a decline of 5.4% compared to the expected decline of 3.7% according to FactSet estimates.
Improvement and Revised Sales Guidance
Target attributed its profit rise to a significant recovery from inventory actions taken last year. However, in light of recent trends, the company lowered its full-year sales guidance and now anticipates a mid-single digit decrease for the remainder of the year. The adjusted EPS expectation has been revised to range between $7.00 and $8.00 from the previous guidance of $7.75 to $8.75. Despite this adjustment, the FactSet consensus for EPS remains at $7.72.
Stock Performance
Year to date, Target’s stock has experienced a 16% decline, while the S&P 500 index (SPX, -1.16%) has seen a 16% increase.