Investing.com – Target stock (NYSE:TGT) traded 2.5% lower in Wednesday’s premarket as same-store sales growth decelerated sharply in the second quarter to reflect a return to more normal times for consumers.
The approval of a new $15 billion share repurchase program didn’t provide noticeable support. The new program will begin when the remaining money from the 2019 program, approximately $1.8 billion, is exhausted.
Second-quarter comparable sales grew 8.9% compared to 24% jump in the same period last year.
Digital comparable sales in the quarter rose 10%, compared to a 195% rise in the same period a year earlier.
Driven by stimulus checks, extremely low interest rates and the fear of running out of supplies in the pandemic, consumers stocked up on just about everything last year. That level of super spending is now fading as the economy reopens. Retail data for July released on Tuesday showed overall sales fell 1.1%, with more spending going on services and experiences rather than goods.
Operating margin fell a little to 9.8% from 10% last time out, as higher merchandise and freight costs weighed. The company was partly able to counter these challenges with lower markdowns and a favorable category mix.
Sales rose 9.4% to $24.82 billion. Adjusted earnings per share of $3.64 was higher than the estimated $3.49.
The retailer has guided for high single-digit growth in comparable sales for the second half of the year. Operating margin rate is seen at 8% or higher.