Target reported Q2 earnings continued to grow faster than Walmart and improve their operating leverage.

A few notes:

• Sales grew 8.9% and Digital Sales grew 10% y/y on top of 195% y/y growth the previous year.

• Same Day Digital Delivery Services (BOPIS, Driveup, Shipt) grew 55% y/y, on top of 270% growth previous year. Incredible.

• More than 95% of Target’s 2Q Digital sales were fulfilled by its stores - 2 new sortation centers opening this year, these are downstream of stores in high-density markets to facilitate same-day efficiency. This is a good sign, it means that some of their store efficiency improvements are baked in and they are moving further down the value chain. (This is tech they acquired from GrandJunction)

• Super-interesting note that Target Circle (membership/loyalty) is 100M members. Compared to Amazon ~150M US Prime Members, this is great. I don’t recall tracking Target Circle recently. Walmart+??

• In the past 5 years, Target employees grew 20% while sales grew 45%. This is great operating leverage and likely that will continue to improve. No doubt this is due to smaller store formats being the primary mode of investment.

  Continue to be on track to open 30 new small format stores this year - these are little fulfillment centers.