MMM: Target Q2 2024 Earnings Results and Trends; Mars and Kellanova Advertising Trends

Key Takeaways:

• Target’s FY 2Q24 EPS and revenue exceeded street expectations as it benefited from resilient consumer demand tied to its lowering of prices across more than 5,000 items. Per ST data, Target US app MAUs increased 3.4% YoY in FY 2Q24, an acceleration in YoY growth of ~200 bps vs 1Q24. This was directionally in line with the company’s reported increase in 2Q24 traffic (+3% YoY), which also saw an acceleration in YoY growth (+500 bps) from 1Q24

• Average user time spent on Target’s desktop website, mobile app and mobile website during Target Circle Week (July 7-13) increased 31%, 18% and 11% WoW, respectively, as consumers flocked to the retailer during the event to take advantage of timely deals

• Target also noted stellar performance in its retail media network, known as Roundel, which has become a significant contributor to its “other” revenue line item. This growth was largely corroborated by ST data, which shows that Roundel served 10% more impressions in FY 2Q24 vs FY 2Q23

• ST data shows that the relatively new Kellanova is already one of the top advertisers within the CPG category, ranked 14th overall as of 1H24, while Mars ranked 9th. With Mars’ acquisition of Kellanova, the combined advertisers’ US ad spend would rank fifth overall in the CPG category, just behind PepsiCo, and would account for 4% of ad spend across the category

• Kellanova’s spend distribution was highly targeted to its banner products in 1H24 as Cheez-It, PopTarts, Pringles, and Rice Krispies Treats accounted for 25%, 23%, 13%, and 11% of advertiser spend, respectively, while Mars’ US ad spend was focused on its confectionery offerings; as M&M, Orbit Gum, and Snickers accounted for the highest percentage of advertiser spend in 1H24 at 15%, 10%, and 10%, respectively

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