24 August 2020
The Weekly
United States

Target reported one of its strongest quarters yet, with profits surging about 81% year-over-year. Second-quarter comparable sales growth of 24.3% is the strongest the company ever reported, with in-store comp sales growing 10.9% and stores enabling more than three quarters of Target’s digital sales, which rose nearly 200%. For the three-month period ending Aug. 1, Target’s total revenues were $22.6bn, compared with $18.1bn last year. The company earned $1.7bn in profits, up from $938mn a year ago. Deemed an essential retailer, Target was able to remain open during the pandemic and subsequent lockdown Stateside. During the most recent quarter, stores fulfilled more than 90% of sales. In-stores sales comps were up 10.9% despite an environment where we’ve seen unprecedented digital shopping. But same-day services — including BOPIS, drive-up and shipping services — also had impressive gains during the quarter, growing a combined 273% year-over-year. Out of those services, drive-up had the biggest increase, rising 734%, followed by Target Shipt, up 350%, and a 60-% increase of in-store pick-ups. Their most recent data indicates that a multichannel guest spends four times as much as a store-only guest and 10 times as much as a digital-only guest. After a guest tries drive-up for the first time, they see a nearly 30% increase in their overall spending, including an increase in their conventional store shopping.

Comparable digital sales increased 195% during the quarter, helping secure 10mn new digital guests in the first half of the year. Even apparel was making a comeback: A 20% dip in the first quarter rebounded with double-digit growth during the second quarter. Beginning of the year Target launched a new activewear brand, All in Motion, and the timing couldn’t have been better, as guests across the country have moved to working from home, they’ve embraced the quality, comfort and value. Meanwhile, the Minneapolis-based retailer continues to invest in both its workforce and retail fleet. On July 5, all hourly associates in the U.S. were guaranteed a $15 minimum hourly rate. Target, which currently has about 1,900 stores nationwide, is also on track to open 27 new brick-and-mortar locations this year, nine this month. The company ended the quarter with $7.2bn in cash and equivalents and $14.1bn in long-term debt. Target expects the back-to-school and holiday-shopping seasons to be longer than in previous years as consumers adjust to a new normal.

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