Target Sales Jump as Pandemic Speeds E-Commerce Shift

Target said it plans to lengthen the traditional back-to-school shopping season, making school supplies available throughout the fall.

Photo: Justin Sullivan/Getty Images

Target Corp. TGT -0.48% posted the strongest quarterly growth in its history, including a near tripling of digital sales, as coronavirus concerns fueled demand for services that let shoppers pick up goods in parking lots or skip trips to the store.

Like rival Walmart Inc., Target has benefited from being able to stay open throughout the pandemic as well as selling groceries and other household staples. Online comparable sales rose 195% from a year ago, driven by same-day pickup and delivery services. Walmart said Tuesday its e-commerce revenue nearly doubled in the latest quarter.

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Target’s comparable sales, those from stores and through digital channels operating for at least 12 months, rose 24% in the quarter ended Aug. 1, a company record and twice as much as in the May quarter. Target executives cited broad gains across categories such as food, electronics and home goods and a rebound in clothing sales.

“In the current environment, each of our categories are performing very well,” CEO Brian Cornell said on a call with reporters. The Minneapolis company estimated it has taken about $5 billion in sales from competitors since the start of the year.

Government stimulus checks and extra unemployment benefits are a factor, Mr. Cornell said, “but even as the stimulus waned, we continued to see strong growth.” So far comparable sales in August are up “low double digits,” he said. Walmart executives said sales moderated in July as benefits were reduced.

U.S. consumer retail spending collapsed in March and April when restrictions to stem the spread of Covid-19 required many stores to shut. Government data has recorded three straight months of spending gains at restaurants and stores as many businesses reopened.

Big chains such as Target, Walmart and Home Depot Inc., along with e-commerce giant Amazon.com Inc., have been among the biggest beneficiaries of new shopping habits and increased spending on homes and food.

Walmart’s U.S. comparable sales rose 9.3% in the most recent quarter, bringing its global revenue to $137.7 billion. Home Depot said U.S. comparable sales rose 25%, and total revenue, including Mexico and Canada, reached $38 billion in the quarter.

Target, which operates about 1,900 stores, is smaller than those two companies. Its total revenue reached $22.9 billion in the quarter, compared with $18.4 billion a year earlier. Sales through digital channels accounted for 17% of revenue, around $3.9 billion.

Smaller chains and traditional department stores, many forced to close during the early days of the pandemic, aren’t faring well. Lord & Taylor, J.C. Penney Co. and Stage Stores Inc. have all filed for bankruptcy protection since May. Last week, off-price chain Stein Mart Inc. filed for chapter 11 with plans to close most of its roughly 280 stores.

On Tuesday, Kohl’s Corp., which temporarily closed its department stores in the spring, said revenue fell 23% to $3.4 billion for the quarter ended Aug. 1. Kohl’s said sales rebounded in June, but tapered off again in July as the coronavirus surged in parts of the country.

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Walmart Inc. said its e-commerce revenue jumped 97% from a year ago. The company reported in its second-quarter earnings that sales have grown due to its online supply chain and grocery business. WSJ’s Sarah Nassauer reports. Photo: Eduardo Munoz/Reuters

For Target, sales of higher-margin goods such as apparel helped boost profits, offsetting coronavirus-related expenses such as higher wages and cleaning costs. Net income increased 80% compared with last year, hitting $1.7 billion and beating Wall Street’s expectations.

Target said it plans to lengthen the traditional back-to-school shopping season, making school supplies available throughout the fall. Target said it thinks around two-thirds of American students are starting the year learning online without clarity on when in-classroom teaching will resume. “We want to extend the season,” Mr. Cornell said, “and be ready.”

Write to Sarah Nassauer at [email protected]

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