Target continues to set the pace for how consumers shop in the era of coronavirus.
The big-box retailer revealed fourth quarter and full-year earnings Tuesday morning before the bell, registering more than $1 billion in profits for the third quarter in a row thanks to growth throughout Target’s ecosystem, including increased demand for same-day services like drive-up and home delivery.
“Following years of investment to build a durable, scalable and sustainable business model, we saw record growth in 2020, as our guests turned to Target to safely provide for their families throughout the pandemic,” Brian Cornell, chairman and chief executive officer of Target, said in a statement. “With the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020 and grew our revenue by $15 billion, which is more than the 11 prior years combined. As we look ahead to 2021 and beyond, we see continued opportunity to invest in our business and our team, building on the strong foundation we’ve established to drive market share gains and deliver profitable growth for years to come.”
Target seemed to have grown on all fronts. Total revenues for the three-month period ending Jan. 30 grew 21.1 percent to $28.3 billion, up from $23.3 billion the same time last year. That’s 20.5 percent growth in comparable sales for the quarter, year-over-year, while comparable traffic grew 6.5 percent. Store comparable sales increased 6.9 percent during the quarter, while digital comparable sales surged 118 percent. And consumers spent more each time they shopped at Target, whether in stores or online: average ticket value increased 13.1 percent during the quarter, year-over-year.
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Same-day services — which include buy-online-pick-up-in-stores, drive-up and Target’s delivery service Shipt — were up 212 percent for the quarter, with drive-up growing 500 percent, year-over-year.
The company logged $1.38 billion in profits for the quarter as a result, up from $833 million the same time last year.
For the year, total revenues were $92.4 billion, up from $77.1 billion in 2019. Target registered $4.36 billion in profits in 2020, up from nearly $3.3 billion a year earlier.
“Target’s ability to manage the COVID-related surge in revenue during Q4 and for the full-year while maintaining margins validates the soundness and effective execution of its continuing strategic multi-year investment program,” said Charlie O’Shea, Moody’s vice president. “A $15 billion increase in revenue for the full-year with stable margins is staggering, particularly when core competitors Walmart and Amazon are also running on all cylinders. We believe [Target’s] foundation has strengthened to the point that it will continue to excel regardless of the environment.”
Target’s winning formula includes a mix of essential and discretionary items, including a growing assortment of fashion, beauty and other coveted third-party products as brands compete for space in Target stores and on its website. The list includes luxury lingerie designer Journelle, Levi’s Red Tab products, New Zealand beauty brand Monday Haircare, Thinx period-panties, Ulta Beauty, Priyanka Chopra’s new hair care brand Anomaly and Disney, which opened about a dozen shops-in-shop in select markets in late 2019.
Earlier this month, the Minneapolis-based retailer revealed Apple shops-in-shop were launching in 17 Target stores, possibly more this fall. In addition, Target has a number of its own in-house labels. The company’s All In Motion activewear brand surpassed $1 billion in revenues after only a year on the market.
The company has also recently updated its senior leadership team and continues to invest in its workforce.
Target is not providing forward-looking guidance. The retailer ended the quarter with 1,897 stores, cash and cash equivalents of $8.5 billion and $11.5 billion in long-term debt.
Shares of Target, which closed up 1.44 percent to $186.09 each Monday, are up about 70.6 percent, year-over-year, with a market cap of more than $93 billion.
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