Target has reported another quarter of positive comparable sales growth, which an analyst described as an encouraging sign that the retailer is on the right track for recovery.

Net sales for the second quarter ended August 1 grew 5.3 per cent to $26.5 billion, with comparable sales up 3.8 per cent.

Last quarter, Target swung back to comparable sales growth after a long run of decline. According to GlobalData MD Neil Saunders, this quarter’s numbers proved that the company is performing better.

“A 3.8 per cent comparable uplift is healthy and is largely the result of efforts made to improve the customer experience and strengthen execution. It shows that when Target gets the retail fundamentals right, customers respond,” he said.

However, the analyst stressed that the retailer has a lot more work to do – especially in ensuring there is consistent execution across the chain.  

Target’s recovery is genuine, but not entirely even across categories, Saunders said, adding that while grocery was the main driver of growth, apparel and home remained subdued.

“That both these discretionary categories were positive is pleasing, but the low growth rates underline how much work still needs to be done on editing and curating the assortments and providing the customer with more inspiration,” he continued.

The retailer did get things right in hardlines and ‘Fun 101’, which includes toys and licensed apparel, according to the analyst, as these categories helped generate strong traffic from family shoppers along with some good sales results. Saunders also expects beauty to get a further boost with the soon-to-open Beauty Studio concept.

On the store front, he lauded Target’s investment in refreshing older stores and adding newer and more engaging formats.

On the bottom line, net earnings doubled to $1.87 billion, but much of this was boosted by a tariff refund. When this is removed, underlying net income is somewhat softer.  

“Overall, the numbers provide growing confidence that Target’s difficult years are ending. The recovery will not necessarily be even and smooth, but there’s a path forward now in a way that there wasn’t a couple of years back,” said Saunders.

For the full year, the company expects net sales growth to be in a range around 5 per cent, up from the prior 4 per cent guidance range.