Sponsored By

Target cites grocery as comp sales catalyst for March, first quarter

Digital channel sales jump as retailer limits customers shopping in stores

Russell Redman

April 23, 2020

4 Min Read
Target-storefront.png
Target experienced March growth in the mid-single digits at stores and more than 100% via the discount retailer’s digital channels.Target

Coronavirus-related purchases, led by groceries and daily staples, fueled double-digit comparable-sales growth in March at Target Corp.

Target said Thursday that March comp sales climbed by low double digits year over year, with growth in the mid-single digits at stores and more than 100% via the discount store retailer’s digital channels.

Among core merchandise categories, comp sales jumped about 40% in essentials and food and beverages for March, while hardlines comps surged 20%. Home products comps declined by low single digits, and apparel and accessories sank more than 30%.

So far in the first quarter, which began Feb. 2, comp sales are up more than 7%, showing a dip in stores and over 100% growth in digital, according to Target. Comp results have gained more than 20% in essentials and food/beverage and over 16% in hardlines, but were up only slightly in home products and down more than 20% in apparel and accessories.

Target noted that, despite market-share gains across its core merchandise categories, shopping patterns have changed significantly as customers responded to the COVID-19 pandemic. February comp sales grew 3.8%, but Target said it saw a spurt in traffic and sales in stores and digital channels late in the month as consumers stocked up. That was followed in mid-March by a stronger traffic and sales surge, notably in food/beverage and essentials. Later in March, sales trends in stores dropped and digital sales accelerated as customers began to shelter in place, the Minneapolis-based retailer reported.

Related:Target to meter shopper traffic as coronavirus safety measure

Target_Drive_Up-store_associate.png

In March, sales trends in Target stores dropped and digital sales accelerated as customers began to shelter in place, the Minneapolis-based retailer reported.

Early April sales activity reflected that of late March but “improved meaningfully” starting April 15, Target said. Month-to-date in April, comp sales are up more than 5%, reflecting a mid-teens decline at stores and a 275% gain in digital channels. Thus far in April, comps have increased over 12% in essentials and food/beverage, more than 30% in hardlines and in the high teens in home, while while apparel and accessories are down more than 40%.

“Our strategy was built to be durable and sustainable in any environment, and its strength is driving our business in the face of marked shifts in shopping behaviors caused by COVID-19. Because of our strong business model, we are able to make considerable investments to support our team, put protections in place, and adjust to serve our guests who are being advised to shelter in place and avoid stores,” Target Chairman and CEO Brian Cornell said in a statement.

“As a result, we are seeing record-setting digital growth, strong demand for our same-day fulfillment services and broad market-share gains across each of our core categories,” Cornell explained. “While this crisis will certainly put near-term pressure on our profitability, that pressure is far outweighed by doing right by our team and our guests. We’re confident the actions we're taking today will drive growth and greater guest affinity over the long-term.”

Related:Target scales back store remodels, openings due to COVID-19

Target, which pulled its first-quarter guidance in its March 25 financial update, said Thursday it expects operating margin for the quarter to decrease by more than five percentage points. The company cited various factors related to the coronavirus pandemic, including investments in pay and benefits to support employees, a shift in category mix toward lower-margin segments, a shift in fulfillment from brick-and-mortar to digital, and inventory writedowns in apparel/accessories due to falling sales in that category.

“Over the last several years, we have strengthened Target’s operational and financial model, investing in our unique, multicategory merchandise assortment, positioning our stores to fulfill every type of shopping, and supporting and developing our team. Throughout this crisis, the response of our business, and especially our team, are providing vivid evidence of the value of this model,” stated Michael Fiddelke, executive vice president and chief financial officer. “While we expect our short-term profitability to be affected by COVID-19, we expect to have the financial capacity to emerge from this crisis in a position of strength. Having established an even stronger bond with our guests during this unprecedented time, we expect to have a compelling long-term opportunity to grow profitably and gain additional market share in the years ahead.”

Also on Thursday, Target extended its $2-per-hour temporary wage hike until May 30. The company, too, said it will extend access to free, safe backup care for employees and a 30-day paid leave for vulnerable workers (seniors, pregnant women and those with underlying medical conditions) through the end of May.

“We have deep gratitude for the remarkable effort our team has put into supporting guests across the country,” Cornell commented. “We remain committed to prioritizing our efforts to provide for their well-being so they can take care of themselves and their families during this unprecedented time.”

For our most up-to-date coverage, visit the coronavirus homepage.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like