Discount Stores

Average sentiment across Discount Stores rose from 7 to 7.4, and one name accounts for the move. Target (TGT) climbed from 5 to 8 on net sales of $25.4 billion, up 6.7%, with comparable sales up 5.6% driven by a 4.4% increase in traffic and growth across all 6 core merchandise categories and both stores and digital channels. Gross margin rate of 29% ran about 80 basis points higher than a year ago on productivity initiatives, supply chain leverage, and lower markdown rates. Management raised full-year net sales guidance to growth centered around 4%, 2 percentage points stronger than the prior range, and now expects EPS near the high end of the $750 million to $850 million range. Merchandising newness carried the sales line: 3,000 new food items sold more than 50% above the prior assortment, 1,500 new wellness items drove double-digit sales growth, and 2,000 new baby items contributed to more than a 5 percentage point acceleration in baby comp trends. Management flagged that Q1 had the easiest prior year comparison and that Q2 faces a nearly 2 percentage point harder overlap.