A shopper wearing a face mask due to the coronavirus disease (COVID-19) pandemic searches toys at a target store in King of Prussia, Pennsylvania on November 20, 2020.
Mark Makela | Reuters
Like-for-like sales rose 17.2% on Wednesday in November and December, according to Target, as customers bought matching pajamas and gingerbread house kits to celebrate a cozy vacation at home during the pandemic.
While online sales remained robust, shoppers also visited Target’s stores, spending more money per purchase than they did last Christmas. The combined transactions at Target stores and on their website increased 4.3% and the average tickets increased 12.3% year over year.
Despite strong results during the peak shopping season, Target’s revenue growth slowed slightly compared to its earnings in the third fiscal quarter. The delay underscores the challenge that Target will face in the coming quarters. As more Americans are vaccinated, the company will need to demonstrate that it can hold market share gains even if consumers are more comfortable taking numerous trips to smaller stores or returning to malls.
The pandemic can also permanently change the cadence of the holiday shopping season. Target said its stores will close on Thanksgiving Day 2021.
The retailer had chosen to remain closed on last Thanksgiving due to the health crisis. To distribute sales and thin crowds, Target began selling weeks before Thanksgiving, which had previously been the starting line for finding gifts and gift items. It also put more of its offers online.
According to Target, comparable digital sales more than doubled in November and December from the same period last year, while like-for-like store sales increased 4.2%.
Target’s guidance only includes sales in November and December, though the fourth fiscal quarter doesn’t end until January 31st. The results for the entire quarter will be published on March 2nd on a virtual investor day. Prior to Wednesday’s news, analysts polled by Refinitiv estimated that after adjustments, Target would make $ 2.27 per share on revenue of $ 26.67 billion.
Target was one of the bright spots in a badly affected retail sector. The company saw staggering sales growth and $ 6 billion in market share gains as many other retailers were hit by temporary store closures and even filed for bankruptcy during the pandemic. With limited business travel, consumers have spent more money in a handful of places, and these have usually been large retailers where they can get a gallon of milk, detergent, and sweatpants at once or on their website.
As in the earlier months of the pandemic, Target’s customers continued to use the company’s fast, contactless online options. The Drive Up pick-up service picked up from the roadside on the same day grew by more than 500%. The target sales achieved by Shipt increased by more than 300% during the holidays.
Few retailers have reported their Christmas sales to date, but Target has far outperformed the industry’s ecommerce growth. According to Adobe Analytics, online purchases in the US increased 32.2% for the 2020 vacation compared to 2019 as more shoppers shopped from home during the pandemic.
Target has also taken strategic moves that have paid off. It owns Shipt, a same day home delivery service. Fresh and frozen groceries have recently been added for roadside collection, a same day service that has grown by more than 500% over the holidays. And it has added a premium line of gourmet pasta sauces and coffees to its retail and beverage brand Good & Gather as people cook more at home.
Housewares and hardlines, which include equipment and sports equipment, were particularly popular during the holidays. Both categories recorded sales growth in the same business of only 20% compared to the previous year. Within the hardlines, growth was driven by electronics sales.
The comparable sales of food and beverages rose by 17%, according to Target. Beauty and the essentials grew in the younger teens, and apparel saw high single-digit gains.
Target said family nightwear sets and Christmas tree decorations were among the best sellers. The retailer also sold nearly 2 million of its Wondershop gingerbread houses.
Target stocks with a market value of nearly $ 100 billion rose nearly 60% over the past year. The stock closed at $ 199.10 on Tuesday, not far from its 52-week high of $ 199.50 that it set on Monday.