Need to Know
- The U.S. retailer blew past forecasts, reporting Q2 profits of $1.7 billion, an 80.3% year-over-year increase.
- The jump was led by a huge increase in e-commerce as comparable digital sales grew by 195%.
- Target also reported 10 million new digital customers in the first half of 2020.
- Sales fulfilled by Shipt, the courier system owned by Target, grew by more than 350% year-over-year, while curbside pick-up sales grew 700%.
U.S. retail giant Target blew past industry forecasts with its Q2 report this week, posting profits of $1.7 billion, an 80.3% spike from the same time last year.
The effects of the COVID-19 pandemic on consumer shopping habits were apparent in Target’s Q2 earnings report. The company reported strong digital growth, with 10 million new digital customers shopping with Target in the first half of 2020, leading to a 195% spike in online sales for the second quarter of the year. Sales fulfilled by Shipt, the delivery company that Target purchased in 2017 for $550 million, grew by 350% year-over-year; Drive Up, Target’s curbside pickup system, saw growth of a whopping 700% compared to Q2 of 2019.
Overall revenue for Target in Q2 was $23 billion, compared to the $20.09 billion that was expected for the company.
“The key to our success is we’ve been true to our strategy, and our team is really focussed on being agile and flexible and adjusting to the current operating environment,” said Target CEO Brian Cornell. “We’ve been changing the playbook every week.”
In-store pickup also grew, increasing by more than 60% in Q2; overall, more than 90% of Target’s overall sales involved its stores, whether this meant that customers were purchasing in-store or picking up curbside, or that Target was shipping items directly from brick-and-mortar store locations.
Across individual categories, Target saw a 70% spike in electronics sales, as more individuals adjust to work-from-home arrangements. Food and beverage and essentials sales were up 20%, while home purchases increased by 30%. Sales of products by Good & Gather, Target’s in-house brand, hit $1 billion; that brand was introduced less than a year ago.
Target’s digital sales have been on the uptick since the pandemic began: the company reported a 141% spike in digital commerce in Q1 of this year, with overall sales rising by 10.8% over the same period. The company this week joined fellow retail giant Walmart in posting impressive Q2 results, with that company reporting $137.74 billion in revenue, and a Q2 surge in digital sales of 97%, on Tuesday.