Big investments in stores and in tech pay off at Target

Heavy investments in stores and its online operations are paying off at Target, which reported strong numbers across the board in the second quarter.

Sales at stores opened at least a year, a key measure for a retailer’s health, rose 6.5 percent, the strongest growth in 13 years. Traffic in stores and online rose 6.4 percent, the strongest showing since 2008 when it first started releasing that information.

Online sales soared 41 percent, surging past the 28 percent jump in the previous quarter.

It also raised its annual earnings expectations Wednesday.

The division between companies that can invest heavily in operations is growing. Sales at Target and Walmart are surging, leaving other behind.

Target is re-investing more than $7 billion through 2020 to update stores and open smaller locations in urban markets. It’s revamping private store brands. The company also increased the minimum hourly pay to $12 starting this past spring, the second hike in a matter of months.

With last year’s acquisition of same-day delivery service Shipt for $550 million, Target is now offering same-day delivery of groceries and other merchandise to more than 1,100 stores in 160 markets. It also began curbside pickup service for online shoppers at more than 800 stores in 25 states and next-day delivery for some items nationwide.

The Minneapolis retailer reported a profit of $799 million, or $1.49 per share. Earnings, adjusted for pretax gains, came to $1.47 per share, which is 7 cents better than Wall Street expected, according to a Investment Research survey.

Revenue was $17.78 billion, also better than expected.

The company now expects earnings for the current fiscal year to be $5.30 to $5.50. Analysts had expected $5.28 per share.

Shares rose nearly 5 percent, or $3.94 to $87.21 in pre-market trading.

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Elements of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on TGT at https://www.zacks.com/ap/TGT

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