Coverage: Target posts its best earnings in more than a decade

Shares of Target Inc. surged Wednesday after the retailer reported unprecedented growth in foot traffic at its stores, along with second-quarter profit, revenue and comparable store sales that surpassed analysts’ expectations.

Lauren Thomas of CNBC.com had the news:

The big-box retailer also said digital sales skyrocketed more than 40 percent during the quarter. Building on that momentum, it raised its earnings outlook for the full year.

“We are seeing a great consumer response … unprecedented traffic. As we go back and look, we’ve never seen traffic like this,” CEO Brian Cornell told CNBC’s Becky Quick on Wednesday.

Target shares were up more than 5.5 percent in early trading on the news, hitting an all-time intraday high of $88.89.

The retailer has been focused on reinvesting in its business ever since it laid out a strategy at the start of last year to pour $7 billion into expanding its e-commerce platform, bulking up its lineup of in-house brands, opening new small-format stores and remodeling existing locations. Cornell said those investments appear to be paying off. Target reported its strongest same-store sales growth in 13 years.

Elaine Low of Investor’s Business Daily reported that Target is building an answer to Amazon.com:

When asked about Amazon and Walmart, Cornell responded in an on-air CNBC interview: “I think of them every single day. And we measure ourselves against their performance. So we are fighting for those trips, we’re fighting for those footsteps, we’re fighting for the clicks, and right now I think we are starting to build momentum.”

Target is “building an answer to Amazon,” wrote Quo Vadis Capital President John Zolidis before the open Wednesday.

“Target is well along the path to transforming its business model and consumer offer and positioning itself to take share over the long-term,” he said. “The Street has not come around to this view, thus making the stock exceptionally interesting, in our opinion.”

Looking ahead, Target sees current-quarter EPS of $1.00-$1.20, about in line with consensus for $1.09. Full-year EPS is now seen at $5.30-$5.50, up from a prior view of $5.15-$5.45 and above consensus for $5.29.

Tonya Garcia of MarketWatch.com reported that Target’s smaller store gives them access to more customers:

Target has also added smaller-format stores in more areas around the country, which has given the company access to new markets and new customers, Cornell said on the Wednesday morning media call.

Not only are the stores located closer to shoppers, but they’re providing services, like same-day delivery and a drive-up service that brings purchases to shoppers’ cars, which provide the ease that today’s multiplatform shoppers are looking for.

“We’re shipping from more than 1,400 stores, using them as fulfillment centers,” Cornell said on the call.

Analysts support the varied use of stores, which were once seen as detrimental in an increasingly e-commerce world. Target reported 41 percent digital sales growth.