Target’s Digital Sales Surge Triple-Digits as It Shells Out $500M in Coronavirus-Related Costs
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Digital sales fueled Target Corp.’s gains in the first quarter as efforts to halt the spread of the coronavirus kept consumers indoors.
The big-box chain, which today posted its financial results, saw same-store sales growth up 10.8% — driven by a 141% surge in e-commerce sales.
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Revenues through its digital channels accelerated every month in the quarter, soaring from 33% in February to 282% in April. According to the company, stores fulfilled nearly four-fifths of its digital sales in the three months ended May 2, while its delivery and buy online, pick-up in store services jumped 278%. It added that customers made fewer and bigger shopping trips as the average basket size increased 12.5%.
“With our stores at the center of our strategy and a significant investment in the safety of our team and guests, our operations had the agility and flexibility needed to meet the changing needs of our business,” chairman and CEO Brian Cornell said in a statement. “With the dedication of our team, the benefit of a sustainable business model and a strong balance sheet, we are confident Target will emerge from this crisis an even stronger retailer, with higher affinity and trust from our guests.”
During the first quarter, profits fell to $284 million, or 56 cents per share, from the prior year’s $795 million, or $1.53 per share. On adjusted basis, earnings per share were 59 cents, compared with analysts’ expectations of 68 cents a share. Revenues improved 11.3% to $19.6 billion, slightly above market watchers’ bets of $19 billion.
Amid continued uncertainties around shopping patterns and government policies, Target previously withdrew its full-year outlook. The Minneapolis-based retailer has so far spent about $500 million on coronavirus-related costs, including higher wages and improved benefits for associates, cleaning and sanitation, personal protective equipment supplies and reformatting stores to allow for social distancing.
Target’s earnings report comes a day after rival Walmart posted same-store sales that shot up 10% — led by strength in food, health and wellness products and other general merchandise categories as coronavirus-panicked shoppers fueled demand for essential goods. What’s more, the Bentonville, Ark.-based chain’s e-commerce sales rose 74%, with contactless pickup and delivery services helping drive purchases on its website and marketplace.
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