NEW YORK (AP) — Target boosted its outlook for the second quarter after its campaign to revitalize its brand pushed sales higher and lifted customer traffic.
The rosier guidance helped beleaguered retail stocks, with the indexes that track department stores leading the S&P 500 on Thursday.
Target now expects a modest increase in sales at existing stores, which would reverse four consecutive quarters of declines for that measure. The Minneapolis-based company had said in May that it expected a decline of a low single-digit percentage for the quarter.
It also said it expects second-quarter profit to be at the high end of its previous guidance of 95 cents to $1.15 per share.
It’s an encouraging sign that Target’s efforts to increase the range of exclusive brands under its roof, push a low-price message and improve customers’ experience online and in stores are working. The company faces stiff competition from Walmart and Amazon.com.
“Our team is energized and focused on enhancing and modernizing the Target shopping experience, and our guests are responding,” CEO Brian Cornell said in a company release.
Cornell said the May launch of a brand called Cloud Island, which offers nursery decor, has been a success. Target is also set to launch four more exclusive brands in home and clothing in the next few months, part of bigger plan to offer 12 new exclusive store brands by the end of next year.
With the new moves, Target is phasing out longtime store brand Merona, which offers men’s and women’s clothing, over the next few months. Target is also retiring Mossimo’s men’s business, but keeping its women’s line.
Target releases its second-quarter financial results next month.
“We like this momentum, but we do continue to see (Target) as a work in progress,” wrote Cowen & Co.’s Oliver Chen.
Shares rose more than 4 percent to $53.31 on Thursday, and the stock of many other retailers tagged along.