Analyst estimate for Q2
Target (TGT) is likely to impress investors with its sales performance in the fiscal second quarter. Analysts expect the company to report net sales of $17.3 billion in the fiscal second quarter, up 5.2% on a YoY (year-over-year) basis. Target’s expanded digital offerings, its focus on merchandising, store remodeling, and value pricing should drive traffic.
Key growth drivers
Target’s top line is likely to benefit from the continued improvement in comparable-store sales (or comps). The company’s comps are expected to see sequential improvement led by higher traffic. Notably, sales in the warm weather categories could improve, which should support the comps growth rate.
Meanwhile, Target accelerated the pace of store remodeling and the opening of small-format stores, which is a positive, as these stores continue to see higher sales and productivity. Also, Target launched several exclusive “only-at-target” brands, which are gaining popularity among shoppers and are witnessing strong sales.
Moreover, the company’s comps are also expected to benefit from the continued strength in its digital business. Target’s digital business has been the key catalyst behind its improved comps. Similarly, Walmart’s (WMT) US comps are also benefitting from digital initiatives that are contributing meaningfully to the comps growth rate.
Target’s management projects low to mid-single-digit growth in comps during the fiscal second quarter. Fiscal 2018 comps are also likely to improve on a YoY basis.