It’s not surprising that Target had a blisteringly hot quarter, fueled by pandemic shopping. But it’s worth noting just how effective its omnichannel strategy is.
Overall, the Minneapolis-based retailer’s comparable sales gained 10.8%, with shoppers making fewer and bigger trips. But digital sales skyrocketed 141%, including a 282% gain in April. And with stores fulfilling 80% of those online orders, the large increases prove how viable Target’s “stores as hubs” omnichannel strategy really is.
Citing employees’ “extraordinary resilience,” Target CEO Brian Cornell says he is confident the chain will “emerge from this crisis an even stronger retailer, with higher affinity and trust from our guests.”
Total revenue reached $19.6 billion, an 11.3% gain from the comparable period a year ago. But as a testimony to how expensive it has been for essential retailers to function during the pandemic, operating income sank to $468 million in the first quarter, and 58.7% decline from the year-ago period.
In a conference call webcast for investors, Cornell says that by mid-April, patterns shifted.
“We experienced a rapid increase in traffic and sales in our stores and a broad surge in sales and more discretionary categories, including apparel, which persisted throughout the end of the
month,” he says, according to the Seeking Alpha transcript.
“The surge in stores occurred while our digital growth continued at unprecedented rates of 200% to 300% above last year. As a result, over the last couple of weeks of April, we saw some of the strongest comparable sales growth we’ve experienced in our history.”
Target is “executing well in a challenged and volatile environment,” writes Edward Kelly, an analyst who follows Target for Wells Fargo, in his note on the retailer’s results. “While margins and the bottom line experienced significant pressure in the first quarter, it’s hard to ignore digital growth of 141%, comparable growth of 10.8%, the success in meeting this unprecedented demand and the company’s overall positive positioning against a consolidating retail landscape.”
And in more evidence that the company is ready to talk about topics other than COVID-19, Target released a trailer for its first-ever documentary. Called “Design for All,” the film focuses on changes in the world of design, expanding to create items like sensory-friendly apparel and adaptive Halloween costumes. Produced by RadicalMedia, the film is available on Hulu.