Target’s earnings exceeded Wall Street estimates as its sales gained a strong holiday season boost and stimulus checks.
Shares fall less than 1% in premarket trading.
The big box retailer has benefited as shoppers look for easy and safe ways to buy groceries and other items. Its 2020 sales grew by more than $ 15 billion, higher than the total sales growth of the previous 11 years.
Target already reported holiday sales, but its online sales gained strength in January, as Americans received $ 600 stimulus checks.
Still, Target declined to provide a forecast for next year, saying the pandemic has made it too difficult to predict consumer patterns.
This is what the company reported during the fourth fiscal quarter ended Jan. 30 compared to what Wall Street expected, according to a survey by Refinitiv analysts:
- Earnings per share: $ 2.67 adjusted compared to $ 2.54 expected
- Revenue: $ 28.34 billion vs. $ 27.48 million projected
In the last 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 the items, Target earned $ 2.67 per share, more than the $ 2.54 per share expected by analysts, Refinitiv said.
Revenue rose 21% to $ 28.34 billion from $ 23.4 billion last year, above analysts’ expectations of $ 27.48 million.
Comparable sales, a key metric that tracks sales in stores open at least 13 months and online, increased 20.5% compared to a year earlier, as digital comparable sales increased 118% interannual. This exceeded the 16.8% comparable sales growth that analysts expected, according to StreetAccount.
Target has attracted new customers and inspired more shopping with its ecommerce offerings and a wide range of products, from cereals to training pants, as competitors like Macy’s and Kohl temporarily closed stores and saw how sales declined during the pandemic. The big box retailer said it earned about $ 9 billion in market share in the fiscal year, citing internal and third-party investigations.
Customers bought more often with Target and bought more during the quarter. Combined online and in-store traffic grew 6.5% and the average ticket increased 13.1% compared to a year earlier, the company said.
Target’s same-day services, such as sidewalk pick-up and Shipt home delivery service, have been especially popular. Sales through same-day services grew 212% in the quarter. Sales through the sidewalk pickup service, Drive Up, grew more than 500%.
By offering different purchasing approaches, Target said it strengthens customer loyalty. It was said that customers who shop through various channels (such as visiting stores and receiving home deliveries by Shipt) spend almost four times more than a customer who only buys in stores and almost ten times more than a customer who only buys online. .
In the coming months, Target will face challenging comparisons due to higher sales levels during the global healthcare crisis. It will have to keep up with customers and their portfolios as Covid-19 cases decrease, more Americans get vaccinated and people can get back to their habits. Instead of consolidating trips to a Target store or their website, shoppers can spend the weekends back at the mall or spend more money on dinner, going to the movies, or traveling.
At the close on Monday, Target shares have risen nearly 81% over the past year and have brought the company’s market value to $ 93.119 billion.
Read Target’s press release here.