The goal is to increase growth during the Covid-19 pandemic, at the expense of rivals

Comparable sales, those of stores and digital channels operating for at least 12 months, increased by almost 21% in the fiscal quarter ended January 30, driven by strong demand for online services, including collection and delivery of orders the same day. Throughout the fiscal year, revenue reached $ 93.6 billion, up 20%.

“After years of investment in building a lasting, scalable and sustainable business model, we saw record growth in 2020,” said CEO Brian Cornell.

In recent years, Target has increased investment in online services. Instead of spending a lot to establish a massive network of online fulfillment stores, Target has used stores as malls to send orders online or allow shoppers to pick up their orders in store parking lots.

During the last fiscal year, approximately 95% of sales came from in-store fulfillment, which includes products purchased in stores, as well as online orders placed in stores, the company said. Comparable digital sales (orders placed online or through the Target app) more than double the most recent quarter.

This model, in addition to selling products in high demand during the pandemic, such as home decor, food and toilet paper, helped Target gain market share over the past year. Target, along with many large box retailers, remained open in the early days of the pandemic, while department stores and clothing retailers had to approach store shoppers. Target said Tuesday it estimates it earned about $ 9 billion in sales from the competition.

Target’s profits rose last year despite a jump in Covid-19-related spending that remains high, executives said. As sales grew rapidly, “our gross margin rate also increased and we saw an incredible amount of leverage” in spending, the company’s chief financial officer Michael Fiddelke said in a call with analysts . This growth “compensated more than investments in equipment and guest security,” he said.

In the most recent quarter, net income reached $ 1.38 billion, 66% more than the previous year. Earnings per share were $ 2.67, compared to $ 1.69 the previous year.

Target said it plans to increase store remodeling and other investments this year after it stopped some of those activities at the start of the pandemic. He said he would spend about $ 4 billion a year over the next few years. Its plans include remodeling 150 stores before the holidays this year and 200 a year in the coming years, as well as building about 35 new small-format stores each year, mainly in urban areas and university campuses.

Target store brands grew rapidly last year, executives said, accounting for about a third of revenue and a higher percentage of gross margin.

Like other retailers that have had a good result in the pandemic, Target relied more on e-commerce because of the disruption. Throughout the fiscal year, 18% of sales came from digital channels, compared to 8.8% the previous year. Last week’s Best Buy Co.

it said its online sales rose nearly 90 percent to $ 6.7 billion in the most recent quarter and accounted for 43 percent of total U.S. sales, nearly double the share a year earlier.

Retailers have presented mixed results over the past year. Last week Home Depot Inc.

he said revenues rose 20 percent in his last fiscal year as Americans invested heavily in fixing homes. Annual sales at Macy’s Inc.

it fell by almost 30% amid weak demand for clothes away from home.

Some retailers say pandemic-induced buying trends will persist in the long run, while other industry executives say buyers will return to earlier patterns later this year as more people are vaccinated and spending will pick up at dinners or trips.

Target executives said they expected consumer demand to pick up, such as buying clothes to take away from home or luggage to travel. But sensitivity to germs and a preference for social distancing can be maintained in the long run, Cornell said in a call to reporters.

Target said Tuesday it would not share financial guidance for the current year, citing “highly fluid and uncertain outlooks on consumer buying patterns and the impact of Covid-19.” Many companies stopped issuing financial guidance last year and cited pandemic-related uncertainty.

Write to Sarah Nassauer to [email protected]