NEW YORK (AP) — Online sales at Target more than doubled as the pandemic put millions in lockdown during the first quarter, revealing further the critical role big box stores played in getting supplies to an immobilized population.
The Minneapolis company reported Wednesday that comparable-store sales, which include online purchases, rose 10.8% for the three-month period that ended May 2. That was fueled by a 12.5% jump in the number of items customers bought with each trip to the store as families made major restocking runs, but made fewer trips.
Comparable-store sales rose 0.9%, but online sales more than doubled.
“Last quarter was unlike anything I have ever seen,” Target's CEO Brian Cornell told reporters on a conference call. “It was intense. It was volatile. It was stressful for our guests and for the country."
While a huge swath of stores selling non-essential merchandise temporarily shut down, Target along with Walmart have the advantage of carrying the items that consumers sought to ride out the pandemic.
But like Walmart, Target had an infrastructure already in place — a variety of online services and its 1,800 stores that could be used as distribution hubs. Target said that its stores fulfilled 80% of online sales, and same-day services, like picking up online orders at the stores, nearly tripled.
Cornell said shoppers starting to spring for more discretionary items like clothing and home items in April. He said he believes shoppers were using their federal stimulus checks, but were also starting to venture outside as the economy reopened in a slew of states.
He said Target saw market share gains across all merchandise areas. And it picked up 5 million new customers to its online website and 2 million new customers for its drive-up services.
Still, like other retailers, Target's cost soared as well, to $500 million — all of it related to the pandemic. That included a $2 temporary pay bump that has been extended to July 4. It also includes moves by Target to add social distancing protocols, like signage in stores and frequent sanitizing of the stores and distribution centers. Cornell said those costs won't go away anytime soon.
“There is going to be a premium on creating a safe sanitized shopping environment," he added. And while Target is studying consumer habits as rival stores reopen, he said he believes that shoppers will continue to be interested in contactless shopping including drive-up and curbside pickup.
Target reported an 11.3% increase in total revenue to $19.62 billion for the quarter. Analysts surveyed by FactSet expected $19.02 billion. Net earnings were down 64% to $284 million, or 56 cents a share, compared to $795 million, or $1.53 per share in the year-ago period.
Adjusted results for the quarter were 59 cents per share. Analysts surveyed by FactSet expected 44 cents.