Target shares up 15 percent on strong profit forecast

Target raised its annual profit forecast on Wednesday after reporting better-than-expected quarterly res🐻ults as higher investments to remodel stores and beef up digital business drew in more shoppers, sendi𝓡ng shares up nearly 15 percent.

The retꦅailer has been adding muscle to its same-day services with initiatives like Shipt and Drive-up as customers increasingly get used to faster deliveries from rivals Amazon.com Inc. and Walmart I▨nc.

These services allow shoppers to pull into a store an💞d pick up their orders within minutes of placing them through the mobile app or website. The company said one out of five customers, who used its same-day service in the second quarter, were new.

Faster services also drove more than♓ three-fourths of the 34 percent increase in comparable digital sales. The robust online sales accounted for more than half of the 3.4 percent growth in same-store sales.

Analysts on average🌜 were expecting same-store sales to grow 3 percent, according to I෴BES data from Refinitiv.

“Q2 could not have gone better for Targe♔t,” Moody’s vice president Charlie O’Shea𝓀 said.

Target has also been building on its merchandise by adding more private label brands, redesigning about 300 stores this year and opening smaller locations in college towns and urban areas to reach a 𒉰wider auꦰdience.

Earlier this week, the company said it was starting a new grocery brand, Good & Gather, tha♍t would hit stores in September.

The retaile🔴r expects the brand, which has everything from dairy and meats to ready-to-eat pasta, to have more⛦ than 2,000 items by the end of 2020.

Its store traffic grew 2.4 percent, whi🗹le gross margins improved to 30.6 percent in the q🀅uarter, benefiting from a better assortment of its products and competitive pricing.

꧒“The strong gross margin performance despite the s🌱lew of weather-driven markdown concerns highlights the companies balanced mix, strong execution, and scaling e-commerce strategies,” JP Morgan analyst Christopher Horvers said.

Target said it expected full-year adjusted profit to be between $5.90 and $6.20 per share, up from the prior range 🀅of $5.75 to $6.05 per share🤪.

Excluding certain items, the company earned $1.82 per share in the quarter ended Aug.3, beating the average ana🐽lyst estimate by 20 centܫs.

Total r🎶evenue rose 3.6 percent to $18.42 billion, a🏅bove expectations of $18.34 billion.

Shares of the company, which have risen 29 pꩵercent this year, were on pace to open at a record high.