Target Corp. (TGT, Financial) released its third-quarter results before the opening bell on Nov. 18. The retailer posted earnings and revenue beats thanks to robust digital and same-store sales.
Key metrics
Target's net income of $1.01 billion jumped 42% year over year, translating to GAAP earnings of $2.01 per share. The company reported adjusted earnings of $2.79 per share, which topped analysts' estimates of $1.60. Revenue came in at $22.63 billion, surpassing expectations of $20.93 billion.
Same-store sales grew 20.7%, which was more than the anticipated increase of 11.2%. While the number of transactions surged 4.5% during the quarter, the average transaction amount soared 15.6% as compared to the same period last year.
Digital sales
As a result of the Covid-19 pandemic, customers often refrained from going to physical stores, which is why digital traffic and curbside pickup gained momentum during the quarter.
Comparable digital sales climbed a massive 155%. The retailer said its curbside pickup service flourished during the quarter, up more than 500% as compared to the same period last year.
Other growth contributors
Target's electronics category saw sales grow more than 50% in the third quarter as customers bought office products and video games. While the food and beverage, essentials and beauty categories each grew in the high teens, the home division saw a mid-20s percentage increase and the apparel segment inched up nearly 10%.
The big-box retailer's same-day services gained traction during the quarter, rising 217% year over year. The services allowed customers to pick up products they ordered online on the day of their purchase.
Holiday promotions brought forward
Like most other retailers, Target started rolling out its holiday sales in early October due to the Covid-19 pandemic. Sales and promotions related to Black Friday will not be restricted to a single day as in the past, but are being spread across multiple stores and online events for several days in order to avoid huge crowds.
"I think the guest is reacting well to the fact that we are spreading out deals," CEO Brian Cornell said. "We are making sure they got Black Friday value all month long. And I think the steps we have taken to really make sure it's easy and convenient and safe for our guests to shop is being well received."
Guidance
Target pulled its financial forecast for fiscal 2020 as a result of the pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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