Both Target (TGT -0.47%) and Walmart (WMT 0.16%) shared spectacular second-quarter earnings results earlier this month. But their stocks saw very different fates. Target shares soared more than 12% following its earnings report, while Walmart shares ended up close to flat, down less than 1%.

It's worth noting, however, Walmart saw its shares spike more than 6% after its initial earnings release. But one number uncovered during the earnings call scared investors away.

Walmart reported comparable store sales growth in July fell to 4%, compared to double-digit growth in April and May. Target, meanwhile, saw its comparable store sales in July keep pace with its comp sales in June at around 20%, although both were off the 33% pace set in April. Management said it saw a further slowdown so far in August with a depressed back-to-school season, but it was still seeing double-digit comparable-store sales growth.

Target's sustained comparable-store sales growth bodes well for its future, whereas the stark slowdown at Walmart raises a lot of question marks.

A Target store exterior.

Image source: Target.

What's driving Target's comparable sales growth?

Target's management provided a few extra insights into its sales growth during its second-quarter earnings call that show exactly where the growth is coming from.


Q2 Comparable Sales Growth



Digital (total)


Same-Day Services (total)


In-Store Pickup




Drive Up


Data source: Target.

It's worth pointing out that Target's in-store sales were a significant contributor to overall comparable sales growth. Digital sales contributed 13.4 percentage points to comp sales during the quarter, roughly 55%.

Walmart's management says its digital sales growth of 97% contributed about two-thirds of its total comp sales, more than Target's 55% contribution from digital. That indicates Target's doing a better job attracting in-store traffic that was going to competitors before the coronavirus pandemic. Its strength in apparel and home goods compared to Walmart may be a key reason why. As competing stores reopen, it'll be important to keep an eye on whether Target keeps those customers coming to its stores.

Meanwhile, Target's same-day fulfillment options are booming. Most notably is the increased adoption of Drive Up, its curbside pickup service. Target has seen excellent Drive Up customer retention. Management says Drive Up customers historically spend 30% more than non-customers. What's more, they come back to Target or more often. Indeed, Target's seven-day and 90-day repeat purchase rates were higher last quarter than they've been historically, management said. That's another signal Target will be able to sustain its growth.

Drive Up may see continued strong adoption in the back half of the year. Target recently started expanding the service to include groceries, going up against Walmart in that area. It expects all 1,500 stores to offer curbside pickup for groceries as well as its general merchandise in time for the holidays this winter. Walmart currently offers grocery pickup at 3,450 stores, and it's working to expand the service to include general merchandise.

Walmart isn't as optimistic

Walmart was quick to temper enthusiasm around its strong sales. Management was keen to point out sales were bolstered by stimulus checks, people spending less on dining out and travel, and in general a greater need for home entertainment. Those tailwinds won't stay at the same elevated levels through the rest of the year.

Importantly, Target faces the same environment. As mentioned, it seems to be winning more in-store shoppers from competitors than Walmart, so it'll face the added pressure of competition opening back up for the rest of the year.

Still, Target's optimistic it can continue its strong results. "I think what's going to stick around for us is the growth we've seen in market share, the relationship we've built with the consumer during the pandemic, and the growing trust that we've formed with the guest," CEO Brian Cornell said in his closing remarks during the retail company's earnings call. Investors seem to agree.