Target Corporation (NYSE:TGT) stock exploded to record highs as stellar Q3 financial results indicated the company is reaping rewards of a multi-year effort, focused on building a durable and flexible model. The retail giant blew past analysts’ expectations on profit and sales, helped by booming online sales.
Digital sales Growth
Unlike in the first half of the year, where the company felt the full force of the COVID-19 pandemic, quick delivery services saw the company attract more customers. The retailer continues to adapt well to changing consumers' shopping patterns. Digital sales increasing by 155% attests to Target’s growing e-commerce prospects.
Borrowing a leaf out of other e-commerce players, Target has ramped up investments in same day services like Drive UP, Shipt, and in-store pickups. Conversely, it’s been able to address customers' concerns who don’t want to walk into brick and mortar stores to do shopping.
Similarly, it does not come as a surprise that the retail giant is one of the big winners from the disruptions triggered by the pandemic. Investments in private label and online business should continue to strengthen revenue streams going forward.
Investment Drive
Target has also made investments as it seeks to boost safety standards in its retail outlets. This explains why it was the only retailer to see an uptick in-store traffic. Rival Walmart saw a decline in-store traffic in the recent quarter. Conversely, it is clear that Target is gaining new customers as well as retaining them, going by the sales growth rate.
Online and store sales grew 20.7% in the recent quarter as Target posted $22.63 billion in revenues. Same-store sales were up 20.7% as net income rose to $1.01 billion or $2.01 a share, compared to $714 million or $1.39 a share generated a year ago.
As the focus shifts to online sales, Target is increasingly ramping up investments and restructuring, having already converted some of its stores into mini distribution centers. The company also remains focused on the small format store strategy, which has room to boost sales per square foot.