Target Corp. (TGT, Financial) released its first-quarter 2021 results before the opening bell on May 19. The retailer posted earnings and revenue beats thanks to robust digital and same-store sales.
The company's shares surged 3.8% in premarket trading to $214.25 following the earnings announcement.
Key metrics
Target's net income of $2.1 billion jumped a mammoth 640% year over year, translating to GAAP earnings of $4.17 per share. The company reported adjusted earnings of $3.69 per share, which topped analysts' estimates of $2.25. Revenue came in at $24.20 billion, surpassing expectations of $21.81 billion.
Looking back, for full-year 2020, revenue amounted to $93.56 billion compared to $78.11 billion in 2019. GAAP earnings were $436.8 billion, translating to $8.64 per diluted share. That compares with $328.1 billion, or $6.34 per share, recorded in 2019.
Back to Q1 2021, same-store sales grew 22.9%, which was more than the anticipated increase of 10.7%. While the number of transactions surged 17.1% during the quarter, the average transaction amount soared 5% 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 50%. 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 hardlines category saw sales grow in the high-30% range in the reported quarter as customers bought office products and video games. Food, beverage and essentials grew in the low-to-mid single digits range combined, while home sales saw a mid-30% growth. The beauty division's sales increased by a high-teens percentage rate and the apparel segment boomed more than 60%.
The big-box retailer's same-day services gained traction during the quarter, rising 90% year over year. The services allowed customers to pick up products they ordered online at the stores on the day of their purchase.
Guidance
Target has provided guidance for the second quarter of fiscal 2021. The retailer predicts comparable sales to grow in the mid-to-high single digit range. The company has projected that its operating margin rate will be above the second quarter 2019 rate of 7.2%.
Similarly, for the full-year, the company anticipates the operating margin rate "to reach 8 percent or somewhat higher."
CEO Brian Cornell had the following to say:
"Given the trust we've built with our guests quarter after quarter and our commitment to adjusting along with them to the ongoing shifts in the macro environment, we're confident in continued comp growth in the second quarter and through the remainder of the year, as well as a healthy full-year operating margin rate."
Disclosure: I do not hold any positions in the stocks mentioned.
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