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No double dip here, Target’s comps solid

MINNEAPOLIS - The 4.5% increase in same-store sales Target reported for June was at the high end of the company’s expectations and came on top of a prior year increase of 1.7%. The gain was driven primarily by an increase in average transaction size while growth in the overall volume of transactions appeared to moderate somewhat.

Target chairman, president and CEO Gregg Steinhafel said he was very pleased with the company’s performance at the upper end of a guidance range that called for a low-to-mid single-digit improvement.

“Our teams continue to focus on delivering fashion, value and reliability in every merchandise category both in stores and online. We believe that offering our guests the right combination of wants and needs, along with a great shopping experience, will lead to continued success for Target,” Steinhafel said.

With one month left to go in the company’s fiscal second quarter, Target’s overall same-store sales stand at 3.8%, which the company said is consistent with its expectation that sales results would strengthen following a first quarter in which comps advanced 2%.

Once again, the company saw the strongest performance in the grocery category, where comps increased in the mid-teens and in health care, beauty and household essentials, where comps were in the mid to uppers single digits. Also encouraging from a margin standpoint was the fact that the company’s apparel comps were “quite strong” and in line with the total monthly gain of 4.5%.

Other large segments of the company’s business produced uneven results. For example, the hardlines business experienced a slightly decline, but electronics posted an increase inline with the company’s average. A similar situation existed in the home areas, where overall comps declined, but categories such as tabletop, sheets and storage experience an increase above the company average.

The company also noted that its comparable sales performance was “remarkably consistent” across the country and it ended the month with inventories “in very good condition.”

Despite the solid June performance, Target isn’t getting ahead of itself with guidance for July and maintains that it expects comps to advance in the range of low- to mid-single digits.

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