Target Corp. (NYSE:TGT) Q2 2019 Earnings Conference Call Transcript

Aug 21, 2019 • 08:00 am ET

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Target Corp. (NYSE:TGT) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Target Corporation Second Quarter Earnings Release Conference Call. [Operator Instructions] Afterwards, we will invite you to participate in a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Wednesday August 21, 2019.

I would now like to turn the conference over to Mr. John Hulbert, Vice President, Investor Relations. Please go ahead, sir.

Executive
John Hulbert

Good morning, everyone, and thank you for joining us on our second quarter 2019 earnings conference call. On the line with me today are Brian Cornell, Chairman and Chief Executive Officer; John Mulligan, Chief Operating Officer; Mark Tritton, Chief Merchandising Officer; and Cathy Smith, Chief Financial Officer. In a few moments, Brian, John, Mark and Cathy will provide their perspective on our second quarter performance, our outlook and progress on our long-term strategic initiatives.

Following their remarks, we'll open the phone lines for a question-and-answer session. This morning, we are joined on this conference call by investors and others who are listening to our comments via webcast. Following the call, Cathy and I will be available to answer your follow-up questions.

And finally as a reminder, any forward-looking statements that we make this morning are subject to risks and uncertainties. The most important of which are described in our SEC filings. Also in these remarks, we refer to non-GAAP financial measures, including adjusted earnings per share. Reconciliations of all non-GAAP numbers to the most directly comparable GAAP number are included in this morning's press release, which is posted on our Investor Relations website.

With that, I'll turn it over to Brian for his thoughts on our second quarter performance and our outlook for the rest of the year and beyond. Brian?

Executive
Brian Cornell

Thanks, John. We are really pleased with our second quarter financial performance, which reflects the durable model we've built over the last several years. In building this model, we focused on making changes to ensure we maintain long-term relevance with our guest, while positioning our business to grow profitably over time. When we began this journey to transform our business in 2017, we said that 2019 would be the year when we'd be positioned to deliver profitable growth. And our results through the first half of this year has certainly fulfilled that expectation.

On the top line, our business delivered second quarter comparable sales growth of 3.4% driven primarily by traffic. This growth was on top of unusually strong comp growth of 6.5% in the second quarter last year, meaning that our comp sales have increased about 10% since 2017. Our best two-year stack performance in well over a decade.

On the bottom line, our second quarter profitability was well ahead of our expectations. Our business delivered double-digit growth in operating income, which translated into record high earnings per share numbers and more than 20% EPS growth over the last year. Among our sales channels, second quarter comp sales grew 1.5% in our stores and 34% in our digital channels. Within our core