Target sees Q3 EBITDA to benefit from expense optimization, Q3 SSS flat to up 1%
Expects Q3 Canada EBITDA to improve $25M compared to last year. Sees red card penetration growth in Q3 to be flat to 1% and flat in Q4 before re-accelerating into next year. The company said it has been pleased with the results from the back to school season and has seen positive comps in the last six weeks in the U.S. Comments taken from Q2 earnings conference call.
Target’s digital sales, including flexible fulfillment, grew more than 30 percent in the second quarter, approximately double the industry growth rate.
Second quarter U.S. Segment transactions declined 1.3 percent, an improvement of one percentage point compared with the first quarter.
Canadian Segment sales increased 63.1 percent to $449 million from $275 million last year.
In second quarter 2014, Target paid dividends of $272 million, an increase of 18 percent from $231 million last year. In June, the Board of Directors increased the quarterly dividend 21 percent from 43 cents to 52 cents per share, beginning with the dividend payable on September 10, 2014.
"While results from the quarter didn’t meet our expectations, we are seeing some early signs of progress as we work to improve results in the U.S. and Canada,” said John Mulligan, executive vice president and chief financial officer of Target Corporation.
“In the U.S., traffic trends continue to recover and monthly sales are improving, with July comparable sales up more than 1 percent. Better U.S. sales have continued into August, driven by early back-to-school results. In Canada, the team is making important changes to operations and the merchandise assortment with a focus on delivering improved results by this holiday season.”
“Target is an extraordinary company. I’m excited to join the team as we work to drive U.S. traffic and sales, improve Canadian operations and accelerate Target’s digital transformation,” said Brian Cornell, chairman and chief executive officer of Target Corporation. “In the coming weeks and months I will be focused on listening and learning from Target team members in the U.S. and Canada, and working with the leadership team to develop guest-focused, strategic plans to position Target for long-run success.”