Target Corp blew past Wall Street expectations for quarterly profit and sales on Wednesday as more Americans used the big-box retailer’s quick delivery services to buy everything from electronics to home goods during the COVID-19 pandemic.
Comparable digital sales rose 155% in the third quarter, the company said, driven largely by same-day services like Drive up, Shipt or straight in-store pick ups, with more than 95% of sales being fulfilled through stores.
Target has emerged as one of the big winners from the disruption caused by the health crisis as investments in its private label and online business, including faster shipments, pay off.
“Those investments turned out to be crucial. Without them, we would not have been able to meet the extraordinary demand driven by the pandemic,” Chief Executive Officer Brian Cornell said on a media call.
Store traffic at Target also rose in the quarter, unlike at bigger rival Walmart, even with people making fewer trips outdoors.
Comparable sales, which include online and store sales, rose 20.7% in the third quarter ended Oct.31, trouncing expectations of an 11.31% increase, according to IBES data from Refinitiv.
Target also lifted the suspension of its share buyback program and expects to restart it in 2021.
The pandemic has also forced retailers to bring forward their holiday promotions, casting a shadow over the traditional holiday shopping season from Thanksgiving to Christmas day.
“Many have started to shop earlier and we do expect it (shopping) to be spread out during the holiday season, but they are looking to celebrate and … we expect a lot of gift giving,” Cornell said.
Target’s net earnings rose to $1.01 billion, from $714 million a year earlier. On an adjusted basis, the company earned $2.79 per share, beating estimates of $1.60.
Total revenue rose 21.3% to $22.63 billion, beating estimates of $20.93 billion.
Shares were up 2% in premarket trading.
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