Target sales increased by 80% amidst the coronavirus pandemic, beating the forecast of Wall Street for its fiscal second quarter.
Target attracted millions of new customers online and established a record for same-store sales that pushed profits up by 80.3% to $1.7 billion.
Sales online and at stores operating for at least a year rose by 24.3% during the quarter ended Aug. 1. Meanwhile, same-store sales increased by 10.9% while the company’s digital sales almost tripled from a year earlier. Shares rose by about 11% Wednesday morning.
According to CEO Brian Cornell, their mix of merchandise and online options matched the needs of customers who looked for safe and convenient ways to make purchases amidst the coronavirus pandemic. Target is deemed an essential retailer during lockdowns in the US.
“Throughout the year and over the last few years, we’ve built tremendous trust with the guest,” he said on the call. He said that relationship with customers has “been one of the big drivers behind our success.”
Target saw its shopping traffic rose during the second quarter. Customers bought a lot of items, and even beauty and apparel sales were robust. Sales also increased across all five of Target’s merchandise categories. These are electronics; home; beauty; food and beverage; and essentials.
Apparel, which declined by about 20% during the fiscal first quarter, rose by double digits in the second quarter from a year earlier.
Cornell pointed out that the company gained 10 million new digital customers in the first half of 2020. He said it also achieved $5 billion in market share in the period, while many 44 retailers including J.C. Penney to Sur La Table filed for bankruptcy and others, such as Macy’s and Sephora.
Moreover, retailer’s second-quarter net income rose by more than 80.3% to $1.7 billion, or $3.35 per share, $938 million, or $1.82 per share, a year earlier.
Target's total revenue increased from 24.7% to $23 billion from $18.42 billion a year prior, surpassing analysts’ expectations of $20.09 billion.
Cornell did not present a financial outlook for the rest of the year, and the company is able to retain the momentum in early August with same-store sales in the low double digits.
“Sitting here today, I don’t know if 30 days from now that number is going to be 6% or 96%,” he said. “So we’ve got to be flexible, we’ve got to be adaptable.”
US e-commerce sales
US e-commerce sales during the pandemic increased by more than 30%, according to quarterly figures from the US Department of Commerce.
The increase in US e-commerce sales took place between the first and second quarter of 2020, suggesting that the pandemic has caused people to spend more online.
Data showed that consumers spent $211.5 billion online during the second quarter, a 31.8% increase from the previous quarter. This is an important step up from the first quarter, which reported US e-commerce sales of $160.3 billion, a 2/4% increase from the fourth quarter of 2019. E-commerce now makes up for 16.1% of all US sales, up from 11.8% in the first quarter.
Data revealed that the coronavirus pandemic has triggered a shift to e-commerce in the US.
In March and April, several consumers bought essential goods from online retailers, and some of these items are paper towels and hand sanitizer. There has been an increase in purchases for things like electronics and office supplies. Online grocery orders also rose as many consumers chose to avoid supermarkets.
