Target Corp. posted the strongest quarterly growth in its
history, including a near tripling of digital sales, as coronavirus concerns
fueled demand for services that let shoppers pick up goods in parking lots or
skip trips to the store.
Like rival Walmart Inc., Target has benefited from being
able to stay open throughout the pandemic as well as selling groceries and
other household staples. Online comparable sales rose 195% from a year ago,
driven by same-day pickup and delivery services. Walmart said Tuesday its
e-commerce revenue nearly doubled in the latest quarter.
Chains that had to temporarily close stores or don’t sell
food have struggled. TJX Cos ,the parent of off-price chains T.J. Maxx,
HomeGoods and Marshalls, said quarterly sales fell 32% as its stores were
closed for nearly a third of the quarter due to the Covid-19 pandemic. The discounter
has a limited e-commerce operation.
Shares of Target jumped 12% in Wednesday afternoon trading
to new highs, while TJX shares slid 5%.
Target’s comparable sales, those from stores and through
digital channels operating for at least 12 months, rose 24% in the quarter
ended Aug. 1, a company record and twice as much as in the May quarter. Target
executives cited broad gains across categories such as food, electronics and
home goods and a rebound in clothing sales.
“In the current environment, each of our categories are
performing very well,” CEO Brian Cornell said on a call with reporters. The
Minneapolis company estimated it has taken about $5 billion in sales from
competitors since the start of the year.
Government stimulus checks and extra unemployment benefits
helped, Target executives said on a call with analysts Wednesday. Sales growth
has continued as stimulus and supplemental-unemployment benefits waned, though
at a slightly slower pace. August comparable sales are up low- to mid-double
digits, said Mr. Cornell on the call. Walmart executives said sales moderated
in July as benefits were reduced.
The future is filled with uncertainty, said Target
executives. “There are many potential challenges on the horizon, including
uncertainties surrounding Covid-19, economic headwinds from historically high
unemployment, uncertainty surrounding government stimulus and a contentious
November election,” said Target finance chief Michael Fiddelke on the Wednesday
call. Predicting financial metrics “is an exercise in imprecision at this
point,” said Mr. Fiddelke.
U.S. consumer retail spending collapsed in March and April
when restrictions to stem the spread of Covid-19 required many stores to shut.
Government data has recorded three straight months of spending gains at
restaurants and stores as many businesses reopened.
Big chains such as Target, Walmart and Home Depot Inc.,
along with e-commerce giant Amazon.com Inc., have been among the biggest
beneficiaries of new shopping habits and increased spending on homes and food.
On Wednesday, Lowe’s Cos . posted surging sales figures for the May-to-July
earnings period.
Walmart’s U.S. comparable sales rose 9.3% in the most recent
quarter, bringing its global revenue to $137.7 billion. Home Depot said U.S.
comparable sales rose 25%, and total revenue, including in Mexico and Canada,
reached $38 billion in the quarter. Lowe’s comparable sales grew by 35.1% in
the U.S., and total sales increased to $27.3 billion from $21 billion.
Target, which operates about 1,900 stores, is smaller than
those two companies. Its total revenue reached $22.9 billion in the quarter,
compared with $18.4 billion a year earlier. Sales through digital channels
accounted for 17% of revenue, around $3.9 billion.
Smaller chains and traditional department stores, many
forced to close during the early days of the pandemic, aren’t faring well. Lord
& Taylor, J.C. Penney Co. and Stage Stores Inc. have all filed for
bankruptcy protection since May. Last week, off-price chain Stein Mart Inc.
filed for chapter 11 with plans to close most of its roughly 280 stores.
TJX struggled to stock enough goods after an initial surge
of shoppers when it reopened many of its stores. The company said it has
reopened more than 4,500 stores world-wide.
Walmart Inc. said its e-commerce revenue jumped 97% from a
year ago. The company reported in its second-quarter earnings that sales have
grown due to its online supply chain and grocery business. WSJ’s Sarah Nassauer
reports. Photo: Eduardo Munoz/Reuters
— Suzanne Kapner contributed to this article.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
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