Target’s earnings were above Wall Street’s estimates, as sales were boosted by a strong holiday season and stimulus.
Shares are up about 1% in pre-market trading.
The big-box retailer has benefited from this because buyers are looking for easy and safe ways to buy groceries and other items. Its sales in 2020 grew by more than $ 15 billion – greater than its total sales growth in the previous 11 years.
Target has already reported holiday sales, but online sales gained momentum in January when Americans received $ 600 stimulus checks.
Yet Target declined to give a forecast for the coming year, saying the pandemic made it too difficult to predict consumer patterns.
This is what the company ended for the fiscal fourth quarter on January 30, compared to what Wall Street expected, based on a survey of analysts by Refinitiv:
- Earnings per share: $ 2.67 adjusted to $ 2.54 expected
- Revenue: $ 28.34 billion expected against $ 27.48 billion
In the most recent period, net income increased by 66% to $ 1.38 billion, or $ 2.73 per share, from $ 834 million, or $ 1.63 per share a year earlier. Excluding items, Target earned $ 2.67 per share, more than the $ 2.54 per share expected by analysts, Refinitiv said.
Revenue rose 21% to $ 28.34 billion from $ 23.4 billion last year, higher than analysts’ expectations of $ 27.48 billion.
Comparable sales, an important measure that follows sales at stores that open at least 13 months and online, increased by 20.5% compared to a year earlier, as digital comparable sales increased by 118% year on year. This exceeds the comparative sales growth of 16.8% that analysts had expected, according to StreetAccount.
Target attracted new customers and inspired more purchases with its e-commerce offering and wide range of merchandise, from grain to training pants, as competitors such as Macy’s and Kohl’s stores temporarily closed and sales declined during the pandemic. The retailer said it gained about $ 9 billion in market share during the financial year, citing internal and third-party research.
Customers shopped more often at Target and bought more than they did during the holiday quarter. The combined online and in-store traffic grew by 6.5% and the average ticket increased by 13.1% compared to a year earlier, the company said.
Target’s same-day delivery services, such as home pick-up and delivery service Shipt, were particularly popular. Sales by services on the same day grew by 212% during the quarter. Sales through its pick-up service Drive-up, increased by more than 500%.
Offering different shopping approaches, Target said it strengthens customer loyalty. It is said that customers who shop in multiple channels – such as visiting stores and getting home deliveries at Shipt – spend on average almost four times more than a customer who only shops in stores and almost ten times more than a customer who only online stores.
In the coming months, Target will face challenging comparisons due to the increased sales levels during the global health crisis. It will have to hold on to customers and their wallets as Covid-19 cases decrease, more Americans are vaccinated and people may be able to return to old habits. Instead of consolidating outings at a Target store or on its website, they can spend weekends in the mall again or spend more of their money on dining out, going to the movies, or traveling.
With the close on Monday, Target shares rose nearly 81% over the past year, bringing the company’s market value to $ 93.19 billion.
Read Target’s press release here.