Target is demonstrating a significant turnaround, with recent earnings reports indicating a resurgence in customer traffic and sales growth, positioning it as a stronger competitor to retail leader Walmart. The company reported a 3.6 percent rise in customer traffic and a 3.8 percent increase in sales at stores open for at least a year during its second quarter.
Online shopping also saw substantial gains, with sales climbing 8.7 percent and same-day deliveries surging by over 25 percent. Overall sales increased by 5.3 percent, with all six of Target's primary product categories experiencing growth compared to the previous year. Noteworthy strength was observed in food and beauty sales, alongside significant gains in toys, electronics, and other entertainment products.
These improvements come as Target has focused on overhauling its in-store experience and product selection. The retailer stated it has reduced prices on more than 10,000 items over the past year, with 95 percent of its school supply range priced at or below last year's levels. Target CEO Michael Fiddelke has been instrumental in spearheading these turnaround efforts.
Despite reporting a 100 percent year-over-year increase in earnings per share to $4.11, a substantial portion of this growth was attributed to nearly $1 billion in tariff refunds. Excluding this benefit, earnings per share saw an approximate 20 percent increase.
Meanwhile, Walmart also reported a robust second quarter, with total revenue rising 5.9 percent, slightly outpacing Target's 5.3 percent increase. Walmart's global online sales soared 23 percent, with U.S. online sales jumping 24 percent and Sam's Club online sales rising 26 percent. The company noted that nearly half of its marketplace business now utilizes its own delivery network. Similar to Target, Walmart also benefited from tariff refunds, receiving approximately $2.9 billion. Even after accounting for these refunds, Walmart indicated its underlying profit growth was at the high end of its projected 7 to 10 percent range.
Target is actively working to narrow the gap with Walmart, with its increased customer traffic and comparable sales growth being positive indicators. The company has raised its full-year sales forecast to around 5 percent. For the remainder of the year, Target plans to focus on delivering style, newness, and value, particularly for the back-to-school and back-to-college seasons. This includes new collaborations and enhancements to its beauty, apparel, and home offerings, such as the upcoming reinventions of kids' home and bedding lines.
