Target sales beat as shoppers return to stores; online shopping slows down

Aug. 18 (Reuters) – Target Corp (TGT.N) topped analysts’ estimates for same-store sales on Wednesday, as more shoppers visited its stores to shop for clothing and stock up on items essential for the start of the school year, even if they were buying less online compared to pandemic peaks.

Digital comparable sales in the second quarter rose only 10%, compared to a 195% increase in the same period a year earlier, when customers relied on Target’s same-day delivery services, such as Drive up, Shipt, and store pickups, for their shopping needs during the pandemic. Online sales increased 50% in the first quarter.

Total comparable sales increased 8.9% in the quarter ended July 31, beating earlier expectations by 8.68%, according to IBES data from Refinitiv.

Shares of Target, which also announced a new $ 15 billion share buyback program, fell 1.3% in pre-market trading, after gaining about 45% this year.

Target’s results underscore a rebound in in-store shopping and a return to pre-pandemic behavior in the United States, as vaccinations and relaxed restrictions encourage more people to go out.

“We believe America is still embracing stores and the traffic we see tells us that stores continue to play an important role,” said Managing Director Brian Cornell.

Walmart’s quarterly report (WMT.N), released on Tuesday, also reported that more and more people are returning to stores, along with slowing online sales after a record year. Read more

While second-quarter sales increased in key categories at Target, apparel particularly benefited from an early start to school thanks to President Biden’s administration’s early childhood tax credit.

This boost is expected to continue into the current quarter, even as supply chain disruptions, higher labor costs and the fast-spreading Delta variant threaten to hurt the economic recovery.

The second half of the year will likely continue to be volatile, especially with the uncertainty caused by the Delta variant, Cornell added.

Total revenue rose 9.5% to $ 25.16 billion, while excluding items, the company gained $ 3.64 per share, beating expectations of $ 3.49.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sriraj Kalluvila

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