Target Reports Healthy Sales

Target Corporation (TGT - Analyst Report) posted healthy sales results for the four-week period ended July 28, 2012. Target, the operator of general merchandise and food discount stores in the United States, registered an increase of 3.1% in comparable-store sales for July 2012, driven by a rise in average transaction size coupled with an increase in comparable-store transactions.

However, sales were well below an increase of 4.1% marked in July 2011. In terms of performance, Target also lagged its peer, Costco Wholesale Corporation (COST - Analyst Report), which witnessed an increase of 5% in comparable store sales during the period under review.

The company stated that net retail sales for July increased 3.2% to $4.99 billion from $4.84 billion reported in the year-ago period.

Category-wise, Target reported solid sales in Food, with Health & Beauty increasing in the mid-single-digits. Apparel sales marked a marginal increase, while sales of Hardlines and Home witnessed a downfall. Alongside, the company registered a rise in sales in every region.

Minneapolis-based Target Corporation also announced that comparable store sales for the second quarter of 2012 increased 3.1% along with a 3.5% rise in net sales to $16.45 billion. Management noted that the company’s second quarter sales were in line with its expected growth range.

Year-to-date, Target registered a 4.2% increase in comparable-store sales with a 4.8% rise in net retail sales to $33 billion.

Going forward, the company expects comparable-store sales to increase in low- to mid-single-digits for August 2012.

Target’s efficient marketing, multi-channel strategy, product innovation, compelling pricing strategy, and new merchandise assortments, are expected to drive comparable-store sales and operating margins in the long term.

Moreover, Target’s P-fresh remodel program, 5% REDcard Rewards program, City Target stores, The Shops at Target initiatives and foreign ventures safeguard the company from any unprecedented events.

Currently, Target holds a Zacks #3 Rank, which translates into a short-term Hold recommendation. Additionally, we have a long-term Neutral rating on the stock.