MINNEAPOLIS — More shoppers visited Target stores in the recent quarter, said Brian C. Cornell, chairman and chief executive officer, noting “an enthusiastic return to in-store shopping.” At the same time, the retailer’s digital sales increased significantly over the prior year.
“This is the power of ‘and,’” Mr. Cornell said during a May 19 earnings call. “Guests turn to Target because of our stores and our digital options, not one versus the other. And for us, the distinction between a store sale and a digital sale is largely irrelevant.
“Because of our unique stores-as-hub model, more than three-fourths of our first-quarter digital sales were fulfilled by our stores. That means, in total, more than 95% of Target’s first-quarter sales were driven by our store assets, store inventory and store teams. This store-driven growth is translating to outstanding bottom-line performance.”
In the first quarter ended May 1, Target earned $2.1 billion, equal to $4.20 per share on the common stock, up sharply from $284 million, or 57¢ per share, in the prior-year period. Results reflected higher revenues, lower net interest expense and a gain on the sale of Dermstore, an online beauty and skincare business. Excluding the Dermstore divestment, adjusted diluted earnings per share increased 525% to $3.69.
Revenue totaled $24.88 billion, up 23% from year-ago revenue of $19.62 billion.
Store comparable sales increased 18%, on top of 0.9% growth the year before. Digital comparable sales grew 50%, on top of 141% a year ago. Same-day services including order pickup, drive-up and delivery, grew more than 90%.
Target gained more than $1 billion in market share in the first quarter, on top of a $1 billion gain in the comparable period.
The company’s essentials and food businesses delivered comparable sales growth in the low- to mid-single digits, said A. Christina Hennington, chief growth officer.
“To see healthy growth on top of last year is remarkable as you'll recall that a year ago, guests were aggressively stocking up their pantries, fridges and freezers, and we sold virtually every unit of paper goods that we owned,” she said.
Looking ahead, Target management is planning significant investments to further improve the in-store experience and digital services. Mr. Cornell said the company is remodeling hundreds more locations and expanding into new neighborhoods by opening small- and medium-size stores. Additionally, the company is expanding the assortment available for its same-day fulfillment options, adding alcohol beverages and more perishable food for pickup, drive-up and delivery in hundreds of stores.
Shares of Target Corp. trading on the New York Stock Exchange closed at $219.01 on May 19, up 6%, or $12.58, from the previous close of $206.43.