• by Sarah Mahoney  @mahoney_sarah, August 16, 2017

It’s been a gloomy season for retailers, but Target’s latest numbers are giving observers something to cheer about, with stronger sales, better-than-expected profits, and a rosier forecast for the full year. Company execs credit the success of its ongoing transformation effort, improved digital performance and the resounding appeal of its new private-label lines.

Second-quarter comparable sales for the Minneapolis-based retailer climbed 1.3%, while traffic rose 2.1%. Those gains were consistent across the country, categories, channels and throughout the quarter, says chairman and CEO Brian Cornell, in a conference call with to discuss results. Total sales increased 1.6% to $16.4 billion, from $16.2 billion last year. And comparable sales in digital sales jumped a blistering 32%.

Net earnings slid to $672 million, a 1.2% decline from $680 million in the same period a year ago.

It saw gains in four of its five key segments, and even in its grocery business, long a weak spot, it saw improvements in some key categories, including adult beverages. 

Most encouraging, he says, are gains in full-price items, indicating that consumers are increasingly accepting Target’s promise of every day low prices, helping it get away from the constant sales and promotions that eat into profits. And he says consumers are responding well to its Target Run and Done marketing campaign, which reminds people how easy it is to shop Target for essentials.

“While we believe Target has much further to go before the grocery business is fully fixed,” writes Neil Saunders, managing director of GlobalData Retail, in his reaction to the earnings, “we applaud the start it has made in turning around this challenging part of the operation.”

Cornell has designated private-label lines a key part of the re-energizing strategy, and says sales of those brands, which include Cat & Jack, its children’s apparel line; Pillowfort, a kids décor collection, and Cloud Island, the new infant line, have all done well. Saunders agrees: “Not only are these brands credible and compelling, but they are also helping to differentiate Target from rivals.” 

Cornell says its shift to smaller stores and remodeling others is moving more quickly than expected. “We continue to look for ways to move faster,” he says, and it believes it can accomplish more than 300 store remodels next year.

“We remain focused on embracing the power of and,” he says. “We are at our best when we deliver inspiration and convenience, when we invite people to expect more and pay less.”