Target soars most as big retail winner in pandemic

Bloomberg

For nearly all retailers, the pandemic has meant shoppers check out less often and stock up on each trip. But Target Corp bucked that trend with record sales and profit last quarter, emerging as a winner in the Covid-19 era.
The shares jumped as much as 13% to their highest price ever last week after Target reported a 4.6% gain in US transactions — a proxy for both in-person and online customer traffic. That’s a feat even chief rival Walmart Inc couldn’t pull off, with the bigger retailer reporting a 14% drop on that measure.
Target also got shoppers back inside stores, not just filling their carts from the comfort of their couches. The retailer posted a 10.9% increase in comparable sales for its brick-and-mortar stores in the second quarter ended on August 1. That excludes the web operations, and shows that even at a time when Americans are leery of venturing inside a retailer’s four walls, Target can still draw them in thanks to its merchandising.
“Overall we view the results as indicative of Target as a — and maybe the — retail winner,” Mark Astrachan, an analyst at Stifel Nicolaus & Co, said.
Target’s beat continues a run of solid performance that now stretches more than two years, as CEO Brian Cornell has introduced a slew of affordable
private brands, remodeled hundreds of stores and bolstered the retailer’s e-commerce offerings. That model has kept Target on par with Walmart and has also proved to be a winning formula during the pandemic.
With shoppers generally leery of venturing into brick-and-mortar environments, Target’s merchandise selection and safety measures have given them a measure of comfort and a willingness to spend.
Target’s comparable sales rose 24% in the quarter, the fastest pace in the retailer’s 58-year history, and almost three times higher than the average estimate of 8.6% compiled by Consensus Metrix. Adjusted earnings per share also touched an all-time high. The retailer brushed off concerns that demand would ebb after consumers spent their relief checks. Walmart saidy that government stimulus checks provided a boost in its second quarter, but the benefit faded by July.
Target said it experienced “unusually strong” market share gains across its five core merchandise categories.