Target, an American retail corporation, who shut down all stores in Canada back in 2015 (after racking up losses of $2.1 billion), had a massive Q3, beating analysts expectations on Wednesday as the discount shop turned pandemic tendencies into strong gains.
Just how big was Target’s quarter? Let’s put it in perspective:
The retailer’s sales totaled $22.3 billion in the three months ended Oct. 31, a $3.9 billion increase from the same period last year. By comparison, the chain’s increase in sales for the entire preceding fiscal year was $2.7 billion. In other words, in the third quarter alone, it had to figure out how to manage the equivalent of a more than a year’s worth of growth. And that’s after experiencing a huge sales increase in the second quarter. It’s an utterly herculean operational lift — requiring a rethinking of supply chain, inventory management and labor models — and it bodes well for Target’s long-term prospects that it was able to adapt to these conditions so quickly.”
Target seems to have aggressively advertised their curbside delivery service. They have been putting discounts on some items when you select curbside pickup, allowing Target to save money as there is no shipping costs (something Walmart has also done). Additionally, the retailer has also provided better in app promos and coupons in the Target app, further inducing consumers to purchase Target items.
This remarkable growth in 2020 comes as a shock to many people, as back in 2017 when Amazon acquired Whole Foods, Target was around $50 a share and payed a 5% yield. To many, it looked like big box retail was slowly dying. Today, TGT shares trade close to $170.
Another point to focus on is that because Target sells food, they were deemed, essential so they could keep stores open to sell toys, stationary, TVs, clothes, video games, etc. but all other competition that sold only TVs or Clothes all shut down. This has helped increase the market share for Target, Walmart, etc.
It remains to be seen if Target is able to retain this market share as a vaccine begins to roll out across the US in 2021, and the smaller retail stores begin to open back up. Q3 may have just been a revelation for TGT, though, with the US unemployment rate near 7%, consumers may continue to look for value when they shop.