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Target shares hit all-time high after blowout quarter

Target's stock price soared to an all-time high Wednesday after the retailer topped earnings expectations as it pushes faster delivery and invests in new private-label brands.

The company's second-quarter profits jumped 17% to $938 million, while revenues rose to $18.4 billion, up 3.6% increase from the year-ago quarter. Comparable sales in stores rose 3.4% to $18.1 billion, driven by rising customer traffic, while online sales soared 34%.

Target's earnings per share also increased to $1.82 per share, about 21 cents better than Wall Street analysts were expecting, according to a survey by Zacks Investment Research.

The rosy outlook sent investors rushing to the stock, sending stock price soaring 19% in Wednesday morning trading to a record at nearly $102 per share.

The robust quarterly showing from the big-box giant underscores the growing strength of mass retailers as they aggressively expand online to take on competitor Amazon. Discount retailer Walmart last week also raised its expectations for the year after a very strong quarter.

Both are taking market share away from mall-based clothing chains and department stores such as J.C. Penney's, Macy's and Kohl's, which are struggling with weak sales from dwindling store traffic.

Target's strong results contrast with those of many other retailers. Most recently, GameStop on Tuesday laid off more than 100 employees, including workers at its corporate headquarters in Grapevine, Texas, according to video game website Kotaku. The video game retailer's shares have plunged nearly 72% this year.  

Up to 12,000 stores could close this year, with the pace of closures far exceeding 2018 totals, according to Corseight Research.

Expanding online delivery and private labels 

Big-box retailers like Target are expanding online services, bringing in fresh new merchandise and modernizing stores. Off-price chains like T.J. Maxx are also faring well, resonating with shoppers who love to treasure hunt. 

Target is spending more than $7 billion through 2020 to update its stores, open smaller stores in urban areas and expanding online. The retailer's physical stores have remained the company's strongest asset even as the battle for customers has moved online.

Retailers expected to shutter 12,000 stores 01:46

Through Shipt, a delivery service Target purchased in 2017, the retailer lets customers pick up online orders curbside. Shoppers can also get goods delivered to their doorstep in a few hours from a nearby Target. Items bought in a store can be delivered to homes in a number of cities, because of Target's massive footprint.

The company said that sales fulfilled via Shipt as well as curbside or in-store pickup more than doubled over the last year and drove nearly three quarters of its 34% online sales increase.

At the same time, Target earlier this week said it is expanding the private label goods it offers in its stores in a play to boost grocery sales. The retailer said 650 products under the brand "Good and Gather" will appear on store shelves starting Sept. 15. The selection will expand to 2,000 products by late next year.

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