With easing of pandemic induced restrictions in recent months, more shoppers stepped out of their homes to visit the stores of Target Corp and purchased clothes and other school related essential products, helping the retailer to beat estimates of analysts for same-store sales for the quarter. However there was a decline in online sale of the company compared to what is was at the height of the Covid-19 pandemic.
The growth for digital comparable sales was at just 10 per cent for the second quarter compared to a surge of 195 per cent in the same period of the previous year – a time when most of the customers were hunkered at home because of pandemic induced lockdowns and hence depended on Target’s same-day delivery services, such as Drive up, Shipt and in-store pickups, for their daily essentials. The growth in online sale in the first quarter of the current year was at 50 per cent.
The company reported an 8.9 per cent rise in total comparable sales in the three months ended July 31 which was slightly higher than expectations of analysts of 8.68 per cent, according to IBES data from Refinitiv.
There was a 1.3 per cent drop in the shares of the company despite the company announcing a new $15 billion share repurchase program. The stocks have surged by 45 per cent so far this year.
The indications that consumers are returning back to their pre-pandemic behavior in the United States and a consequent rebound in store buying was reflected by Target’s quarterly results, riding on the fast and widespread roll out of Covid-19 vaccines and the easing of restrictions that prompted more people to step out of their homes.
“We believe that America still embraces stores and the traffic we are seeing tell us that stores continue to play an important role,” Chief Executive Officer Brian Cornell said.
Signals of more people returning to stores as well as a slowdown in only sales following record online sales last year was clearly also visible in the results announced by Walmart a day before.
An early start to the back-to-school season from President Biden administration’s advance child tax credit helped a rise in sales of apparel at Target for the second quarter, even though there was a rise in sales across major categories at the retailer.
Analysts and the company expect the trend of growth to continue into the third quarter as well even in the face of disruptions in supply chains, higher costs of labour and as the delta variant of the coronavirus spreads fast across many states of the United States – particularly those that have low rate of vaccinations.
Cornell added that the performance of the company is likely to be under pressure in the second half of the current year particularly because of the spreading of the pandemic.
Target reported a 9.5 per cent rise in total revenue to $25.16 billion while its earning, excluding items, was at $3.64 per share, which beats estimates of $3.49.
(Adapted from EveningStandard.in)