Target exceeded analysts’ estimates for quarterly profit and sales as improving vaccination rates across the country motivated shoppers to return back to shopping in physical stores and spend their stimulus funds on buying apparel, home goods and other things. The company also continued to benefit from a surge in online ordering.
Comparable sales at the retailer’s physical stores rose by 18 percent in Q1, while digital sales improved by 50 percent due to a surge in demand for same-day delivery services such as Shipt, Drive up as well as in-store pick-ups.
“There is much greater optimism as consumers see the economy improve, as they get vaccinated, as they see Covid counts begin to decline,” Chief Executive Officer Brian Cornell said, adding that he expects an increased in foot traffic at Target stores as well as more consumers shopping on its website.
The retailer saw a particularly strong demand for apparel, with sales jumping by 60 percent. Meanwhile, comparable sales for food, beverages and essential products grew in low-to-mid single digits, Reuters reported. These numbers topped bumper sales from last year when demand for packaged foods and essential items such as toilet paper and sanitizer, among other things, skyrocketed due to panic buying.
The company’s shares jumped by 5 percent as its overall comparable sales increased by 22.9 percent. That was significantly higher than the company’s estimates of a 9.93 percent increase. Total revenue went up by 23 percent, reaching $23.88 billion, over $2 billion higher than analysts’ expectations.
Target’s strong performance follows that of several other retailers such as Macy’s, Home Depot and Walmart — all of whom reported positive results with consumers returning back to physical stores.