Target Sales Jump as Pandemic Speeds E-Commerce Shift --2nd Update
August 19 2020 - 2:21PM
Dow Jones News
By Sarah Nassauer
Target Corp. posted the strongest quarterly growth in its
history, including a near tripling of digital sales, as coronavirus
concerns fueled demand for services that let shoppers pick up goods
in parking lots or skip trips to the store.
Like rival Walmart Inc., Target has benefited from being able to
stay open throughout the pandemic as well as selling groceries and
other household staples. Online comparable sales rose 195% from a
year ago, driven by same-day pickup and delivery services. Walmart
said Tuesday its e-commerce revenue nearly doubled in the latest
quarter.
Chains that had to temporarily close stores or don't sell food
have struggled. TJX Cos., the parent of off-price chains T.J. Maxx,
HomeGoods and Marshalls, said quarterly sales fell 32% as its
stores were closed for nearly a third of the quarter due to the
Covid-19 pandemic. The discounter has a limited e-commerce
operation.
Shares of Target jumped 12% in Wednesday afternoon trading to
new highs, while TJX shares slid 5%.
Target's comparable sales, those from stores and through digital
channels operating for at least 12 months, rose 24% in the quarter
ended Aug. 1, a company record and twice as much as in the May
quarter. Target executives cited broad gains across categories such
as food, electronics and home goods and a rebound in clothing
sales.
"In the current environment, each of our categories are
performing very well," CEO Brian Cornell said on a call with
reporters. The Minneapolis company estimated it has taken about $5
billion in sales from competitors since the start of the year.
Government stimulus checks and extra unemployment benefits
helped, Target executives said on a call with analysts Wednesday.
Sales growth has continued as stimulus and
supplemental-unemployment benefits waned, though at a slightly
slower pace. August comparable sales are up low- to mid-double
digits, said Mr. Cornell on the call. Walmart executives said sales
moderated in July as benefits were reduced.
The future is filled with uncertainty, said Target executives.
"There are many potential challenges on the horizon, including
uncertainties surrounding Covid-19, economic headwinds from
historically high unemployment, uncertainty surrounding government
stimulus and a contentious November election," said Target finance
chief Michael Fiddelke on the Wednesday call. Predicting financial
metrics "is an exercise in imprecision at this point," said Mr.
Fiddelke.
U.S. consumer retail spending collapsed in March and April when
restrictions to stem the spread of Covid-19 required many stores to
shut. Government data has recorded three straight months of
spending gains at restaurants and stores as many businesses
reopened.
Big chains such as Target, Walmart and Home Depot Inc., along
with e-commerce giant Amazon.com Inc., have been among the biggest
beneficiaries of new shopping habits and increased spending on
homes and food. On Wednesday, Lowe's Cos. posted surging sales
figures for the May-to-July earnings period.
Walmart's U.S. comparable sales rose 9.3% in the most recent
quarter, bringing its global revenue to $137.7 billion. Home Depot
said U.S. comparable sales rose 25%, and total revenue, including
in Mexico and Canada, reached $38 billion in the quarter. Lowe's
comparable sales grew by 35.1% in the U.S., and total sales
increased to $27.3 billion from $21 billion.
Target, which operates about 1,900 stores, is smaller than those
two companies. Its total revenue reached $22.9 billion in the
quarter, compared with $18.4 billion a year earlier. Sales through
digital channels accounted for 17% of revenue, around $3.9
billion.
Smaller chains and traditional department stores, many forced to
close during the early days of the pandemic, aren't faring well.
Lord & Taylor, J.C. Penney Co. and Stage Stores Inc. have all
filed for bankruptcy protection since May. Last week, off-price
chain Stein Mart Inc. filed for chapter 11 with plans to close most
of its roughly 280 stores.
TJX struggled to stock enough goods after an initial surge of
shoppers when it reopened many of its stores. The company said it
has reopened more than 4,500 stores world-wide.
--
Suzanne Kapner contributed to this article.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
August 19, 2020 14:06 ET (18:06 GMT)
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