Target Sails through 3Q with More than $1B in Profit
Target Corp. is still sailing through the pandemic. Not that anyone had any doubts. Big-box retailers, which have generally been omitted from state-mandated closures, are riding out the coronavirus crisis with ease.
On Wednesday morning, the Minneapolis-based retailer reported net income of $1.014 billion in its third quarter, which ended Oct. 31. That’s about a 42 percent year-over-year jump from the same quarter last year. Revenue also grew by more than 20 percent to $22.3 billion in the most recent quarter.
In a call with analysts on Wednesday, CEO Brian Cornell noted that folks have been consolidating their shopping trips and spending more per visit. They’ve also been visiting more often: Website and in-store traffic grew 4.5 percent, while the average ticket grew by about 16 percent.
“Since the pandemic began in March, we’ve experienced a meaningful acceleration in basket growth, both in stores and online as guests consolidated their shopping into much larger trips,” said Cornell, who also serves as chairman and president.
Digital sales, which have been a strong point for the company, continued to grow in the quarter. Nearly 16 percent of sales originated online in the quarter, compared to about 8 percent in the same quarter in 2019. That trend held true during the second quarter, too.
What were people buying on their Target runs this quarter? Cornell said there was a heavy uptick in electronics sales, for one: Sales in that category grew by about 50 percent year over year. That includes software, video games, and office equipment.
And though digital sales are on the upswing, Target has no plans to abandon its brick-and-mortar presence. In fact, in October, the retailer opened 18 new stores, including a larger-format store in Yonkers, New York. So far in 2020, Target has opened 30 new stores total, said executive VP and CFO John Mulligan. Twenty-nine of those new stores were small-format stores, Mulligan noted.
Mulligan also hammered home just how much sales have grown this year. In the first three quarters of 2020, Target’s sales grew by more than $10 billion.
“For context, that $10 billion in incremental sales is more than our total sales growth between 2011 and 2019, an eight-year period,” Mulligan said. “You might … wonder whether compressing eight years of growth into less than a year was even possible, but clearly the capacity is there.”
Meanwhile, rival Walmart posted similarly strong quarterly results on Tuesday. The Arkansas-based retailer reported net income of $5.14 billion in its third quarter, up from $3.29 billion in the same quarter in 2019. Walmart’s revenue also came in at a whopping $134.7 billion, up about 5 percent year over year.