Target Stock Up on Shoppers Stocking Up

Target (TGT) surprised Wall Street this morning by reporting very strong earnings for its fiscal third quarter. This week, several major retailers have reported earnings.

Many retailers follow the reporting cycle that ends in October. That way, they can fit the key holiday shopping months of November, December and January into one reporting quarter.

For Q3, Target made $2.79 per share. That creamed estimates of $1.60 per share. Sales rose to $22.63 billion. That beat by $1.7 billion. Same-store sales increased by 20.7%. Expectations were for 11.2%.

What accounted for the strong results?

While some retail rivals had to shutter in the early months of the pandemic, Target’s nearly 1,900 stores remained open as an essential retailer that could sell a wide range of goods, from gallons of milk to pajamas and laptops. In recent months, even as shopping mall competitors have opened again, Target said it has held on to customers and won more of their wallets.

Customers shopped more frequently with Target in the third quarter, and when they did, they put more in their baskets, the company said. Combined transactions in Target stores and on its website were up 4.5% year over year, while the average ticket grew 15.6% in the quarter.

Sales in all of Target’s merchandise categories were higher in the third quarter than a year earlier. Electronics shot up by more than 50%. Home items rose by a mid-20s percentage rate. Apparel increased by nearly 10%. And the two other categories, essentials & beauty and food & beverage, grew in the high teens.

The trend seems to be that more shoppers are using Target to “stock up.”

Also this morning, the Census Bureau said that housing starts rose 4.9% in October to an annual rate of 1.53 million. Low mortgage rates are helping out. Building permits were unchanged. That’s still at a 13-year high.

Here’s the chart on housing starts:

Posted by on November 18th, 2020 at 12:52 pm


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