MINNEAPOLIS — Customers who valued the ease of one-stop shopping whether in store or online helped propel Target to its biggest sales jump in company history.
The retailer on Wednesday reported comparable store sales grew 24.3% for the second quarter. Profits for the May-to-July period grew 80% to $1.7 billion, or $3.35 a share. By late morning, the company’s share price had surged more than 12%, trading above $153.
While grocery and essential household items were snatched up in the early weeks of the coronavirus outbreak, shoppers have made more discretionary purchases in recent months with surges in sales in electronics, home and beauty products as well as apparel, which went from a 20% dip in sales in the first quarter to double-digit growth.
“I think one of the biggest changes we saw from (quarter one to quarter two) is the return to guest shopping in our physical stores and the exceptional growth we saw in in-store shopping in an environment where many Americans were turning to digital to fulfill their needs,” said CEO Brian Cornell.
As the back-to-school season has gotten off to a slower start than usual due to the uncertainty of in-school learning, Cornell said the second half of the year including the normally busy holiday season will likely be just as unpredictable.
“We can expect a hard fought election and a holiday season that like so much of this year is likely to be unprecedented,” Cornell said, on a call with media. “Through it all, we will continue taking actions to assure a safe, convenient, consistent shopping experience and we will continue to invest in our team.”
Physical store comparable sales jumped 10.9% while online sales soared 195%, accounting for 13.4 percentage points of Target’s overall sales growth.
Same-day services such as Order Pick Up, Drive Up and Shipt increased 273%. Drive Up grew more than 700% and year-over-year Target sales fulfilled by Shipt delivery grew more than 350%.
Target also added another 5 million new digital customers to make 10 million new digital shoppers for the retailer in the first half of 2020.
The retailer’s net earnings jumped 80.3% in the quarter to $1.7 billion, or $3.35 a share.
Target’s total revenue reached about $23 billion, a jump in nearly 25% compared to last year.
As people continued to spend more time at home due to the pandemic-enduced lockdown, sales of electronics such as office equipment and gaming systems grew more than 70%, the most of any category.
In the first half of the year, Target earned $5 billion in market share gains surpassing all of what the retailer accomplished last year. Target’s owned brands have also been performing well with food brand Good & Gather hitting $1 billion in sales less than a year since it was first introduced joining other billion-dollar Target brands like Threshold and Cat & Jack.
“Target’s Q2 performance obliterated the bullseye, with every line item vastly exceeding our expectations, resulting in first half performance actually improving from 2019 despite Q1’s very rocky start,” said Moody’s retail analyst Charlie O’Shea, in a statement.
Early August numbers show sales growth in the low double digits, Cornell said.
Cornell said he expected to see the holiday season start earlier this year with Target and other retailers starting their sales earlier than normal.
