By Sarah Nassauer 

Covid-19 helped Target Corp. get much bigger.

Target said holiday sales rose solidly during the latest quarter, capping off a year when the Minneapolis-based retailer increased revenue by more than it had in the previous 11 years combined.

Comparable sales, those from stores and digital channels operating for at least 12 months, rose 20.5% in the fiscal quarter ended Jan. 30, boosted by strong demand for online services, including same-day online order pickup and delivery. Over the full fiscal year, revenue hit $93.6 billion, a nearly 20% increase over the previous year.

"Following years of investment to build a durable, scalable and sustainable business model, we saw record growth in 2020," said Chief Executive Brian Cornell.

In recent years Target has ramped up investments in online services. Instead of spending heavily to establish a massive network of online fulfillment warehouses, Target has used stores as hubs to ship online orders or allow shoppers to pick up online orders from store parking lots.

Over the past fiscal year around 95% of sales came from store fulfillment, which includes products bought in stores as well as online orders fulfilled from stores, the company said Tuesday. Digital comparable sales -- orders placed online or through the Target app -- more than doubled in the most recent quarter.

That model, as well as selling products in high demand during the pandemic such as home décor, food and toilet paper, have helped Target grab market share over the past year. Target, along with many big-box retailers, remained open in the early days of the pandemic while department stores and apparel retailers had to close to in-store shoppers. Target estimates it gained around $9 billion in sales from competitors, it said Tuesday.

Like other retailers that have fared well in the pandemic, Target became more of an e-commerce-dependent company because of it. For the full fiscal year, 18% of sales came from digital channels, up from 8.8% fiscal 2019r. Last week Best Buy Co. said its online sales rose almost 90% to $6.7 billion in the most recent quarter and made up 43% of total U.S. sales, nearly double the share in the same period last year.

Retailers have reported mixed results over the past year. Last week Home Depot Inc. said revenue rose 20% in the latest fiscal year as Americans spent heavily to fix up homes. Sales at Macy's Inc. fell nearly 30% in the latest fiscal year as demand for outside-the-home apparel fell.

Some retailers say Covid-19-style buying trends will persist longer term, while other industry executives say shoppers will return to more normalized buying patterns later this year, as more people are vaccinated and return to spending on dining out or travel.

Target said Tuesday it wouldn't share financial guidance for the current year, citing "the highly fluid and uncertain outlook for consumer shopping patterns and the impact of Covid-19." Many companies stopped sharing financial guidance last year, citing pandemic-related uncertainty.

Profit rose in the most recent quarter. Net earnings hit $1.38 billion, up 66% from the previous-year quarter. Earnings per share for the quarter were $2.67 compared with $1.69 in the previous year. Target will host an investor meeting Tuesday morning.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

 

(END) Dow Jones Newswires

March 02, 2021 11:29 ET (16:29 GMT)

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