Target said on Wednesday that comparable store sales were up 17.2% in November and December as customers bought matching pajamas and gingerbread house packs to celebrate a cozy vacation home during the pandemic.
While online sales remained robust, shoppers also visited Target’s stores and spent more money per purchase than last holiday season. Combined transactions in Target stores and on its website were up 4.3% and the average number of tickets grew 12.3% year over year, the company said.
Despite strong results during the busy shopping season, Target’s revenue growth rate slowed slightly compared to its fiscal third quarter earnings. The delay underscores the challenge Target will face in the coming quarters. As more Americans are vaccinated, the company will have to prove that it can maintain market share even as consumers feel more comfortable taking countless trips to smaller stores or returning to malls.
The pandemic could also permanently change the cadence of the Christmas shopping season. Target said its stores will be closed on Thanksgiving Day 2021.
The retailer had chosen to remain closed last Thanksgiving due to the health crisis. To spread the sale and the small crowds, Target began selling weeks before Thanksgiving, which had previously been the starting line for the search for gifts and stocking stuffers. It has also put more of its deals online.
Target said November and December comparable digital sales more than doubled compared to the same period a year ago, while comparable store sales grew 4.2%.
Target’s guidelines only include sales in November and December, although the fiscal fourth quarter won’t end until January 31. It will report full quarter results on March 2 on a virtual investor day. Ahead of Wednesday’s news, analysts polled by Refinitiv estimate that Target would earn $ 2.27 per share, after adjustments, on revenue of $ 26.67 billion.
Target was one of the bright spots in a hard hit retail industry. It has reported blinding sales growth and $ 6 billion in market share gains as many other retailers have been plagued by temporary store closings and even filed for bankruptcy during the pandemic. Because consumers have limited store visits, they’ve spent more of their dollars in a handful of places and that’s usually big box retailers where they can get a gallon of milk, cleaning supplies, and sweatpants all in one stop or all in one website.
As in earlier months of the pandemic, Target shoppers continued to use the company’s fast and contactless online options. Same-day pick-up, Drive Up, grew more than 500%. The turnover targeted by Shipt grew by more than 300% during the holidays.
So far, few retailers have reported their Christmas sales, but Target far outstripped the growth of e-commerce in the industry. According to Adobe Analytics, online purchases in the US were up 32.2% during the holiday season of 2020 from 2019 as more shoppers started shopping from home during the pandemic.
Target has also made strategic moves that have paid off. It owns Shipt, a same-day home delivery service. It recently added fresh and frozen groceries to the sidewalk pickup, a same-day service that grew more than 500% during the holiday season. And it has expanded the range of its private food and drink brand, Good & Gather, to include a premium line of gourmet pasta sauces and coffees as people cook more at home.
Household goods and hardlines, including appliances and sporting goods, were especially popular during the holiday season. Both categories posted sales growth in the same store of close to 20% compared to a year earlier. Within hardlines, growth was fueled by the sale of electronics.
Comparable food and beverage sales were up about 17%, Target said. Beauty and essentials saw growth in the low teens and clothing was up high single digits.
Target said nightwear for the whole family and Christmas tree decorations were among the bestsellers. The retailer also sold nearly 2 million of its Wondershop gingerbread houses.
Target stocks, with a market value of nearly $ 100 billion, are up nearly 60% in the past year. The stock closed at $ 199.10 on Tuesday, not far from the 52-week high of $ 199.50 it set Monday.