Target’s profits exceeded Wall Street’s estimates as its sales increased with a strong holiday season and stimulus checks.
The shares fell less than 1% in pre-market trading.
The large retailer has benefited as customers look for easy and safe ways to buy groceries and other items. Its sales in 2020 grew by more than $ 15 billion – higher than the total sales growth in the previous 11 years.
Target has already reported holiday sales, but its online sales gained momentum in January, when Americans received $ 600 stimulus checks.
Still, Target declined to provide a forecast for next year, saying the pandemic made it very difficult to predict consumption patterns.
Here’s what the company reported for the fourth fiscal quarter ended January 30, compared to what Wall Street expected, based on a survey of Refinitiv analysts:
- Earnings per share: $ 2.67 adjusted against $ 2.54 expected
- Revenue: $ 28.34 billion versus expected $ 27.48 billion
In the most recent period, net income increased 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 increased 21%, to $ 28.34 billion, from $ 23.4 billion last year, above analysts’ expectations of $ 27.48 billion.
Comparable sales, a key metric that tracks sales in stores that have been open for at least 13 months and online, increased 20.5% compared to the previous year, as comparable digital sales increased 118% year-over-year. This outpaced the comparable 16.8% sales growth analysts had expected, according to StreetAccount.
Target attracted new customers and inspired more purchases with its e-commerce offerings and a wide range of merchandise, from cereals to gym pants, as competitors such as Macy’s and Kohl’s temporarily closed stores and saw sales drop during the pandemic. The large retailer said it gained about $ 9 billion in market share in the fiscal year, citing internal and third-party research.
Customers shopped more often with Target and bought more during the holiday season. Combined online and in-store traffic grew 6.5% and the average ticket increased 13.1% compared to the previous year, the company said.
Target’s same-day services, such as sidewalk pickup and Shipt’s home delivery service, are especially popular. Same-day service sales grew 212% in the quarter. Sales through its drive-up collection service, Drive Up, grew by more than 500%.
By offering different purchasing approaches, Target said it is strengthening customer loyalty. He said that customers who buy from multiple channels – like visiting stores and receiving home deliveries by Shipt – spend on average almost four times more than a customer who only purchases in stores and almost 10 times more than a customer who only shop online.
In the coming months, Target will face challenging comparisons because of its high sales levels during the global health crisis. You will have to insure customers and their wallets as Covid-19 cases decrease, more Americans are vaccinated and people can potentially return to old habits. Instead of consolidating trips at a Target store or on your website, customers can spend the weekends at the mall again or spend more money on dining out, going to the movies or traveling.
At the close of Monday, Target’s shares rose nearly 81% last year and brought the company’s market value to $ 93.19 billion.
Read Target’s press release here.