Press Release

Target Reports Second Quarter 2018 Earnings

  • Aug 22, 2018


Unprecedented 6.4 percent traffic growth drives comparable sales growth of 6.5 percent

The Company now expects higher full-year comparable sales and EPS

  • Traffic growth of 6.4 percent is by far the strongest since the Company began reporting traffic in 2008.
  • Comparable sales increased 6.5 percent, the best comp at Target in 13 years.

Comparable store sales grew 4.9 percent.

Comparable digital sales grew 41 percent, on top of 32 percent growth a year ago.

  • GAAP EPS from continuing operations were $1.49, up 22.7 percent from last year. Adjusted EPS1 were $1.47, up 19.8 percent from last year.
  • For the back half of 2018, the Company has raised its outlook for both comparable sales and EPS.
  • The midpoint of Target’s third quarter EPS guidance range of $1.00 to $1.20 represents growth of more than 20 percent compared with last year.
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Target Corporation (NYSE: TGT) today announced its second quarter 2018 financial performance, including comparable sales growth of 6.5 percent and traffic growth of 6.4 percent.  The Company reported GAAP earnings per share (EPS) from continuing operations of $1.49 in second quarter 2018, up 22.7 percent from $1.21 in second quarter 2017.  Second quarter Adjusted EPS were $1.47, up 19.8 percent from $1.22 in second quarter 2017. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.

“We are extremely pleased with Target’s second quarter results, which demonstrate our guests’ excitement for the enhanced and differentiated shopping experience we’re building. For the second consecutive quarter, traffic growth is better than we’ve seen in well over 10 years, driving 6.5 percent comp growth - Target’s best in 13 years,” said Brian Cornell, chairman and chief executive officer of Target Corporation. “We laid out a clear strategy at the beginning of 2017, and throughout this year we’ve been accelerating the pace of execution. We’re on track to deliver a strong back half and we’ve updated our full year guidance to reflect the strength of our business and the consumer economy. As we look ahead to 2019, we expect to achieve scale across the full slate of our initiatives - creating efficiencies and cost-savings, further strengthening our guest experience and positioning Target to continue gaining market share.”

Third Quarter and Full-Year 2018 Guidance
For both the third quarter and second half of 2018, Target expects comparable sales growth in line with the 4.8 percent comparable sales growth the company delivered in the first half of 2018. For the third quarter, the Company expects both GAAP EPS from continuing operations and Adjusted EPS of $1.00 to $1.20, compared with GAAP EPS from continuing operations of $0.87 and Adjusted EPS of $0.90 in third quarter 2017.

For full-year 2018, Target now expects GAAP EPS from continuing operations and Adjusted EPS of $5.30 to $5.50, compared with the prior range of $5.15 to $5.45.  Full year GAAP EPS will reflect the discrete items already reported through second quarter 2018.

Operating Results
Total revenue of $17.8 billion increased 6.9 percent from $16.6 billion last year, reflecting sales growth of 7.0 percent and growth in other revenue of 0.2 percent. Second quarter sales growth reflected comparable sales growth of 6.5 percent combined with the contribution from non-mature stores.  Comparable digital channel sales grew 41 percent and contributed 1.5 percentage points of comparable sales growth.  Operating income was $1,133 million in second quarter 2018, up 3.6 percent from $1,093 million in 2017.

Second quarter operating income margin rate was 6.4 percent, compared with 6.6 percent in 2017. Second quarter gross margin rate was 30.3 percent, compared with 30.4 percent in 2017, reflecting pressure from digital fulfillment costs, partially offset by the benefit of merchandising strategies including cost savings initiatives and efforts to improve pricing and promotions. Second quarter SG&A expense rate was 21.7 percent in 2018, compared with 21.6 percent in 2017, reflecting small year-over-year changes in broad expense categories. Within compensation expense, the impact of higher wages was offset by lower bonus expense compared with second quarter 2017.

Interest Expense and Taxes from Continuing Operations
The Company’s second quarter 2018 net interest expense was $115 million, down 12.2 percent from $131 million last year, reflecting debt retirement and refinancing activity conducted in 2017. Second quarter 2018 effective income tax rate from continuing operations was 21.8 percent, compared with 31.4 percent last year, primarily due to the impact of recently-enacted federal tax reform legislation (the Tax Act).

Capital Deployment
In second quarter 2018 the Company made capital investments of $1,029 million in property and equipment, and returned $761 million to shareholders, including:

  • Dividends of $330 million, compared with $331 million in second quarter 2017, reflecting a decline in share count offset by an increase in the dividend per share.
  • Share repurchases totaling $431 million that retired 5.8 million shares of common stock at an average price of $74.31.

As of the end of the second quarter, the Company had approximately $2.3 billion of remaining capacity under its current $5 billion share repurchase program, reflecting second quarter purchases and an accelerated share repurchase transaction which will settle in the third quarter.

For the trailing twelve months through second quarter 2018, after-tax return on invested capital (ROIC) was 16.0 percent, compared with 13.5 percent for the twelve months through second quarter 2017. Excluding the discrete impacts of the Tax Act, ROIC was 14.2 percent for the trailing twelve months ended August 4, 2018.  See the tables of this release for additional information about the Company’s ROIC calculation.

Conference Call Details
Target will webcast its second quarter earnings conference call at 7:00 a.m. CDT today. Investors and the media are invited to listen to the call at (hover over “company” then click on “events & presentations” in the “investors” column). A telephone replay of the call will be available beginning at approximately 10:30 a.m. CDT today through the end of business on August 24, 2018. The replay number is 800-216-6079.

Statements in this release regarding third quarter, second half and full-year 2018 earnings per share and comparable sales guidance and the expected 2019 impact of our initiatives are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the Company’s actual results to differ materially. The most important risks and uncertainties are described in Item 1A of the Company’s Form 10-K for the fiscal year ended Feb. 3, 2018. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement.

Adjusted EPS, a non-GAAP financial measure, excludes the impact of certain discretely managed items. See the tables of this release for additional information about the items that have been excluded from Adjusted EPS.

Related: Review Target's Complete Q2 Financial Statements

About Target Corporation
Minneapolis-based Target Corporation (NYSE: TGT) serves guests at more than 1,800 stores and at Since 1946, Target has given 5 percent of its profit to communities, which today equals millions of dollars a week. For the latest store count or for more information, visit For a behind-the-scenes look at Target, visit or follow @TargetNews on Twitter.