Profit in the period was $1.22 a share, excluding some items, the Minneapolis-based company said Wednesday in a statement. Analysts had predicted profit of $1.11 on average, according to data compiled by Bloomberg. Same-store sales -- a closely watched benchmark -- also topped analysts' estimates. The results sent the shares on their biggest intraday gain in nine months.
Since taking the helm a year ago, Cornell has been working to boost U.S. traffic by focusing on Target's best categories, including apparel, home goods and toys, and exiting less successful areas like its pharmacy and Canadian operations. The company is also looking to reinvigorate its grocery offerings and focus more on organics and products popular with younger shoppers.
"While the momentum in our financial results is encouraging, we have much more to accomplish," Cornell said in the statement. "Looking ahead, we are focused on making further progress against our strategic priorities and are committed to improving operations as we move through the important back-to- school, back-to-college and holiday seasons."
The stock had already gained 5.8 percent this year, outshining rival Wal-Mart Stores, which has seen its shares decline 19 percent.
Target has been investing in its stores to improve the presentation of its products, putting mannequins in its apparel section to display its clothing and boosting its beauty offerings, said Chief Financial Officer John Mulligan. In the grocery aisles, where sales have been slower, the company is testing new organic and health-focused products. The retailer will have a clearer plan later in the year as to how to revamp its grocery section, he said.
Grocery "remains an opportunity for us," said Mulligan, who will take over the new role of chief operating officer next month. "We are doing lots of tests across the company to see where we get the assortment right."
At the same time, Target has said it aims to cut $2 billion in costs in the next two years, including about $500 million in the current year.
The company's comparable-store sales rose 2.4 percent in the quarter. That topped the 2.2 percent projected by analysts, according to Consensus Metrix. Style, baby, kids and wellness products performed especially well, Target said. Those categories, which Target considers its signature area, grew three times faster than the company's overall average. That's a sign Cornell is restoring prestige to a chain that customers once fawningly called "Tar-zhay" with a faux French accent.
The company's second-quarter performance helped it raise its forecast for the year. It now expects annual earnings of $4.60 to $4.75 a share, excluding some items, Target said on Wednesday. The chain had previously predicted $4.50 to $4.65.
Net income more than tripled from a year earlier to $753 million, or $1.18 a share, in the quarter. Sales increased 2.8 percent to $17.4 billion.
Earnings in the year-earlier period were hurt by Target's slow recovery from an attack by hackers, who stole the personal information of as many as 110 million customers and hurt the company's reputation.
Target has been ramping up its investment in its online and mobile operations as it pulls back on building new, large-format stores. Its digital sales climbed 30 percent last quarter. To boost profits from online orders, the retailer has been increasing its in-store pickup offering and shipping more items directly from its stores rather than a central distribution center.
Lower gas prices also likely helped drive traffic back into the stores last quarter. While concerns about an increase in interest rates by the Federal Reserve and slowing economies abroad have been weighing on consumer confidence, an improving job market has helped keep spending afloat. Sales at retailers advanced 0.6 percent in July, and the prior two months were revised higher, according to the Commerce Department.
"The consumer is gradually doing better as unemployment improves and oil prices go down," said Ivan Feinseth, an analyst with Tigress Financial Partners. "A lot of these stores are going to have really good holiday seasons."
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