Target is proving stores are an important part of the retail landscape — even in the era of the coronavirus.
The big-box retailer revealed quarterly results Wednesday morning, improving on top-line revenues, while logging more than $1 billion in profits. And while digital comparable sales grew 155 percent during the quarter, year-over-year, in-store traffic grew about 4.5 percent for the quarter, with more than 95 percent of the company’s third-quarter sales fulfilled by stores.
“Our strong results in 2020 reflect the benefits of our multiyear effort to build a durable and flexible model, with a differentiated assortment and a suite of industry-leading fulfillment options — all brought to life through the passion and effort of our team. As a result, we’ve seen a deepening level of engagement and trust from our guests,” Brian Cornell, chairman and chief executive officer of Target, said in a statement. “The result is unprecedented market share gains and historically strong sales growth, both in our stores and our digital channels.”
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Target’s stock, which closed down 0.89 percent to $163.04 Tuesday, is up 45.6 percent year-over-year.
“In Q3, we saw growth in every aspect of our business, driven by the temporal role of our stores,” Cornell said on a media call with reporters Tuesday evening. “The key to our growth this year and sustaining momentum over time is the trust our team has built with consumers throughout the pandemic, as they consolidate trips and routinely choose our stores.”
The ceo pointed out that while shoppers took fewer trips to stores during the quarter, they spent more money while in them. The average basket size grew 15.6 percent, year-over-year.
“It’s been encouraging to see the guests coming back to us, each and every week, quarter by quarter, during the pandemic,” Cornell said on the call. “The fact that we’re sitting here today, in our third quarter with store comps — physical store comps up close to 10 percent — to me is a real sign that our guests have placed their trust in Target, that the investments that we’ve made in safety and our team are being recognized and [that] they’re rewarding us, even during the pandemic, with more and more trips to our stores. And certainly, taking advantage of our ease and convenience of our offerings.”
That includes same-day services — such as buy-online-pick-up-in-store, drive-up services and Shipt, Target’s delivery system — all of which grew during the quarter, with the highest returns in drive-up, up more than 500 percent.
For the holidays, Cornell said Target will continue to invest in contactless safety options in stores as consumers begin the shopping season earlier. Target, which has nearly 1,900 stores nationwide, in addition to the e-commerce site target.com, has also opened 29 new small-format Target stores year-to-date.
The beauty department in a Target store. AP Images for Target
Meanwhile, all categories grew during the quarter, with the highest growth in electronics and home goods, increasing more than 50 percent and in the mid-20s percentage range, respectively, year-over-year. But even as consumers continue to work from home, apparel, a high-margin category, as well as beauty, grew, up 10 percent and high teens, respectively.
“We certainly saw strength in intimates and sleep, certainly those loungewear categories,” Cornell said on the call. “But we have seen very strong performance in kids. We’re very pleased with our performance in men’s during the quarter. So, apparel has been one of our strengths. And certainly from a market-share standpoint, one of the real highlights from our business throughout the quarter. And we certainly see that continuing as we finish up the year.
“Strong growth in our beauty business was a precursor to a long-term strategic partnership we announced last week with Ulta Beauty,” Cornell continued, referring to the retailer’s plans to open 100 Ulta Beauty shops-in-shop in Target and on target.com in the second half of 2021. “Beauty is ideally suited to our store strategy, because it embodies both style and frequency. Ulta Beauty will help us build on our success, providing our guests access to dozens of new beauty brands nationwide, with elevated service and presentation in select locations.”
Target ended the quarter with $5.9 million in cash and equivalents and $12.4 billion in long-term debt and borrowing.
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