Target Q2 Earnings Miss Estimates, Comparable Sales Decline Y/Y

Core Insights - Target Corporation reported a decline in revenues and earnings for the second quarter of fiscal 2025, with revenues surpassing estimates but earnings falling short [1][3][7] - The company experienced a decrease in comparable sales, reflecting ongoing challenges in consumer demand and operational pressures, although there were sequential improvements in store traffic and digital sales [2][5] Financial Performance - Adjusted earnings per share were $2.05, missing the Zacks Consensus Estimate of $2.09 and down 20.2% from $2.57 in the prior year [3][7] - Total revenues reached $25,211 million, exceeding the Zacks Consensus Estimate of $24,911 million but declining 0.9% year-over-year [4][7] - Merchandise sales fell 1.2% to $24,719 million, while non-merchandise sales increased by 14.2% [4] Sales Metrics - Comparable sales decreased by 1.9%, with a 3.2% decline in comparable store sales offset by a 4.3% increase in comparable digital sales [5][7] - Traffic, measured by the number of transactions, dipped 1.3%, and the average transaction amount decreased by 0.6% [5] Margins and Costs - Gross margin contracted by 100 basis points to 29%, influenced by higher markdowns and purchase order cancellation costs [5] - Operating margin shrank by 120 basis points to 5.2%, compared to 6.4% in the same period last year [5] Financial Health - At the end of the second quarter, Target had cash and cash equivalents of $4,341 million and long-term debt of $15,320 million [6] - The company paid out dividends totaling $509 million during the quarter [6] Future Outlook - Target reaffirmed its fiscal 2025 guidance, expecting a low-single-digit decline in sales and adjusted earnings in the range of $7-$9 per share [9] - Shares of Target have increased by 13.3% over the past three months, contrasting with a 0.8% decline in the industry [9]