Target Corp's second quarter sales and profit beat estimates on Wednesday, sending its shares up 4 percent in premarket trade, helped by strong online sales and higher customer visits that grew the most in a decade.
The retailer said customer traffic at its stores grew 6.4 percent helped by a strong economy. Rising wages, lower unemployment and tax cuts have put more money in US consumers' pockets this year spurring them to shop more.
That has translated to rising sales for retailers including Target's rivals like Walmart Inc and Nordstrom Inc .
Target has also benefitted from the demise of weaker competitors in the past year. Retail chains including Toys 'R' Us Inc and department store operator Bon Ton Store Inc have either shut down operations or filed for bankruptcy this year. Roughly 4,000 retail stores had shut in the US this year through August 10, according to Coresight Research. Second-quarter same-store sales at Target were higher than estimates, rising 4.9 percent. Analysts expected a 3.99 percent increase, according to Thomson Reuters I/B/E/S.
Online sales rose 41 percent in the second quarter, up from a 32 percent rise a year ago and above the 28 percent rise in the first quarter. Excluding items, Target earned a profit of $1.47 per share in the quarter ended August 4, above the average analyst estimate of $1.40. Revenue rose to $17.78 billion, topping the average estimate of $17.31 billion.
For the full year, Target raised its forecast, expecting adjusted earnings of $5.30 to $5.50, compared with the prior range of $5.15 to $5.45.