Target (NYSE: TGT) earnings Q4 2020 beats estimates with 21% increase in on line sales

 

Target Corporation (NYSE: TGT) today announced its third quarter 2020 financial results, which reflected continued, robust growth in both sales and profitability. The Company reported third quarter GAAP earnings per share (EPS) from continuing operations of $2.01, up 46.3 percent from $1.37 in 2019. GAAP EPS included a $0.75 loss on debt extinguishment, which was excluded from Adjusted EPS. Third quarter Adjusted EPS of $2.79 grew 105.1 percent compared with $1.36 in 2019. The attached tables provide a reconciliation of non-GAAP to GAAP measures. All earnings per share figures refer to diluted EPS.

 

  • Third quarter comparable sales grew 20.7 percent
    • Comparable traffic grew 4.5 percent, and average ticket grew 15.6 percent
    • Store comparable sales increased 9.9 percent
    • Digital comparable sales grew 155 percent, accounting for 10.9 percentage points of Target’s comparable sales growth
    • Same-day services (Order Pick Up, Drive Up and Shipt) grew 217 percent
    • More than 95 percent of Target’s third quarter sales were fulfilled by its stores
  • Throughout the third quarter, the Company continued to gain market share across all five of its core merchandising categories. Year to date, the Company has gained more than $6 billion in market share.
  • Third quarter GAAP EPS from continuing operations of $2.01 was 46.3 percent higher than last year. Third quarter Adjusted EPSof $2.79 was 105.1 percent higher than last year, as strong operating performance offset continued investments in team member pay and benefits and safety measures to protect guests and team members.

 

 

 

 

“Our strong results in 2020 reflect the benefits of our multi-year effort to build a durable and flexible model, with a differentiated assortment and a suite of industry-leading fulfillment options — all brought to life through the passion and effort of our team. As a result, we’ve seen a deepening level of engagement and trust from our guests. The result is unprecedented market share gains and historically strong sales growth, both in our stores and our digital channels,” said Brian Cornell, chairman and chief executive officer of Target Corporation. “In preparation for the holiday season, we focused first on the safety of our guests and our team, making changes to eliminate crowds while enhancing our fast-growing, contactless options like in-store pickup, Drive Up and Shipt. In a holiday season that will feel different for our guests, we’re committed to helping them navigate the season safely, as they find new ways to celebrate with family and friends.”

Fiscal 2020 Guidance

During the first quarter, the Company withdrew its guidance given the unusually wide range of potential outcomes, in light of the highly fluid and uncertain outlook for consumer shopping patterns and the impact of COVID-19.

Operating Results

The Company’s total comparable sales grew 20.7 percent in the third quarter, reflecting comparable stores sales growth of 9.9 percent and digital sales growth of 155 percent. Total revenue of $22.6 billion grew 21.3 percent compared with last year, driven by sales growth of 21.3 percent and an 18.1 percent increase in other revenue. Operating income was $1.9 billion in third quarter 2020, up 93.1 percent from $1.0 billion in 2019.

Third quarter operating income margin rate was 8.5 percent in 2020 compared with 5.4 percent in 2019. Third quarter gross margin rate was 30.6 percent, compared with 29.8 percent in 2019, reflecting the benefit of merchandising actions, primarily from exceptionally low markdown rates, partially offset by the impact of higher digital fulfillment and supply chain costs, along with unfavorable category mix. Third quarter SG&A expense rate was 20.5 percent in 2020, compared with 22.3 percent in 2019, reflecting the benefit of leverage from strong sales growth, partially offset by the net impact of other factors, primarily investments in team member pay, benefits, and safety.

 


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