Target said its sales are still surging this fall and its latest profit topped analysts’ expectations, news that sent its shares to a new high this morning.
With coronavirus-wary shoppers relying on one-stop shopping, Target’s comparable sales jumped 20.7% during August, September and October, a huge jump though slightly less than earlier this year.
“It’s been encouraging to see the resilience and the guests coming back to us each and every week, quarter by quarter during the pandemic and we certainly hope that continues as we go forward into the holidays,” Target CEO Brian Cornell said.
Target said Wednesday it earned $1.01 billion, up 42%, on sales of $22.6 billion, up 21%, during its fiscal third quarter.
The Minnepolis-based company’s stock jumped more than 5% in early trading, passing $170 a share for the first time. For the year so far, Target shares are up nearly 40%.
Target’s comparable sales, or those at stores open at least a year, rise around 1% to 3% in normal times. In May, June and July, they rose a record 24.3% as the pandemic forced Americans to narrow the number of stores they visited and buy more when they shopped.
Target’s store traffic increased by 4.5% in the latest period and the average ticket was up nearly 16%.
Neil Saunders, managing director of data analytics and consulting company GlobalData, attributed Target’s slightly slower growth to the end of enhanced unemployment benefits in August and the return of competition from stores that reopened after being closed early in the pandemic.
He noted that Target was still able to boost customer traffic, something that Walmart, which reported its results Tuesday, wasn’t able to do.
“This is the opposite of a lot of general retailers which have seen traffic decline as consumers have consolidated their shopping trips and ventured out less often,” Saunders said in a note to investors. “This is a testament to the strength of Target’s offer and, in the case of physical destinations, the pleasantness of its stores.”
According to GlobalData survey data, 34% of Americans said they visited Target during the pandemic “just to browse and to get out of the house.” The number was the highest percentage of any retailer in GlobalData’s survey.
Despite the reduction in group gatherings and celebrations due to the virus, customers still followed seasonal shopping trends for Halloween and back-to-school.
Customers waited until late in the season to go back-to-school shopping as school districts across the country decided how they would teach students, Cornell said. But back-to-school business ended up strengthening in September and helped drive sales for the month, he said.
Target began to roll out its holiday sales early in October and spread out its deals over recent weeks offering them in store and online to prevent huge crowds from converging on stores due to safety concerns. Many consumers have started to shop earlier, but most shoppers still have a large portion of their holiday shopping they need to finish, Cornell said.
“It really is playing out the way we expected,” he said. “I think the guest is reacting well to the fact that we are spreading out deals. We are making sure they got Black Friday value all month long. And I think the steps we have taken to really make sure it’s easy and convenient and safe for our guests to shop is being well received.”
Target as well as Walmart, Best Buy and others plan to be closed Thanksgiving. Target will open its stores at regular time for most of its stores on Black Friday.
Similar to earlier this year, electronics continued to be a popular category for shoppers in the third quarter with sales growing more than 50%. With so many people working and learning from home, consumers also bought more home items and decor which pushed sales growth in the mid-20% range. Apparel grew by nearly 10% with less formal clothing like intimates and sleepwear continuing to be popular but also apparel for kids and men.
Following patterns seen already during the pandemic, digital comparable sales grew 155% and contactless same-day services including drive up, order pick up and those delivered by Shipt grew in the triple digits in total but still noticeably less than the growth rate in the first two quarters of the year.
Walmart reported similar results earlier this week with comparable sales in the United States rising 6.4% but still not as strong as earlier in the pandemic.
Twitter: @nicolenorfleet