Business
Target’s holiday sales 2020 jump 17%, online sales double
A shopper wearing a face mask due to the coronavirus disease (COVID-19) pandemic browses toys at a Target store in King of Prussia, Pennsylvania, November 20, 2020.
Mark Makela | Reuters
Target said Wednesday comparable sales rose 17.2% in November and December, as customers bought matching pajamas and gingerbread house kits to celebrate a cozy holiday at home during the pandemic.
While online sales remained robust, shoppers also visited Target’s stores and spent more money per purchase than they did last holiday season. Combined transactions in Target stores and on its website rose 4.3% and average tickets grew by 12.3% year over year, the company said.
Despite the strong results during the peak shopping season, the pace of Target’s sales growth slowed slightly compared with the gains it logged in fiscal third quarter. The deceleration underscores the challenge that Target faces in the quarters ahead. As more Americans get vaccinated, the company will have to prove it can hold on to market share gains, even as consumers feel more comfortable making numerous trips to smaller stores or returning to malls.
The pandemic may permanently change the cadence of the holiday shopping season, too. Target said its stores will be closed on Thanksgiving Day 2021.
The retailer had opted to remain closed last Thanksgiving due to the health crisis. To spread out sales and thin crowds, Target began sales weeks before Thanksgiving, which previously had been the starting line for the search for gifts and stocking stuffers. It also put more of its deals online.
Target said comparable digital sales more than doubled in November and December compared with the year-ago period, while comparable store sales grew by 4.2%.
Target’s guidance includes only sales in November and December even though its fiscal fourth quarter won’t end until Jan. 31. It will report the full quarter’s results on March 2 at a virtual investor day. Ahead of Wednesday’s news, analysts surveyed by Refinitiv estimated Target would earn $2.27 per share, after adjustments, on revenue of $26.67 billion.
Target has been one of the bright spots in a hard-hit retail industry. It has reported eye-popping sales growth and $6 billion in market share gains as many other retailers have been pummeled by temporary store closures and even filed for bankruptcy during the pandemic. As consumers have limited store trips, they have spent more of their dollars in a handful of places and those have tended to be big-box retailers where they can get a gallon of milk, cleaning supplies and sweatpants all in one stop or all on one website.
As in earlier months of the pandemic, Target shoppers continued to use the company’s quick and contact-free online options. Its same-day curbside pickup service, Drive Up, grew by more than 500%. Target sales fulfilled by Shipt grew more than 300% during the holidays.
Few retailers have reported their holiday sales so far, but Target far outpaced the industry’s e-commerce growth. According to Adobe Analytics, U.S. online purchases over the 2020 holidays grew 32.2% from 2019, as more shoppers shopped from home during the pandemic.
Target has also made strategic moves that have paid off. It owns Shipt, a same-day home delivery service. It recently added fresh and frozen groceries to curbside pickup, a same-day service that grew by more than 500% over the holidays. And it has expanded the assortment in its food and beverage private label, Good & Gather, with a premium line of gourmet pasta sauces and coffees as people cook more at home.
Home goods and hardlines, which include appliances and sporting equipment, were especially popular during the holidays. Both categories saw same-store sales gains in the low-20% range compared with a year earlier. Within hardlines, growth was fueled by electronics sales.
Comparable sales of food and beverage rose about 17%, Target said. Beauty and essentials saw growth in the low teens and apparel saw high single-digit gains.
Target said family sleepwear sets and Christmas tree ornaments were among its bestsellers. The retailer also sold nearly 2 million of its Wondershop gingerbread houses.
Target shares, which have a market value of nearly $100 billion, have gained nearly 60% over the past year. The stock closed Tuesday at $199.10, not far from its 52-week high of $199.50, which it set Monday.
New York Governor Andrew Cuomo wears a protective face mask as he arrives to speak during a daily briefing following the outbreak of the coronavirus disease (COVID-19) in Manhattan in New York City, New York, U.S., July 13, 2020.
Mike Segar | Reuters
New York has seen the worst of its post-holiday coronavirus outbreak and will begin lifting restrictions on much of the state, but more contagious strains of the virus that have recently emerged could impede that progress, Gov. Andrew Cuomo said Wednesday.
Triggered by dinners with family and friends, the holiday surge appears to have peaked in New York on Jan. 4 when the positivity rate, or the percentage of Covid tests returning positive, reached about 8% across the state. That figure has since dipped to roughly 5.6%, Cuomo said.
“I think at this point it’s safe to say the holiday surge was anticipated, the holiday surge did happen, but the holiday surge is over,” Cuomo said during a press briefing in Albany.
The Democratic governor said the state will lift restrictions on gatherings and some nonessential businesses across most of the state — except in parts of the greater New York City area, including Washington Heights, the Bronx and Queens, and the Newburgh area upstate.
Those areas are still considered “yellow zones” under New York’s micro-cluster strategy, an effort to target economic restrictions to specific areas where the virus is spreading more. New York will lift restrictions on all remaining orange and yellow zones, which will eliminate harsher limits on indoor dining, gathering sizes and businesses such as gyms, barbershops and hair salons.
Existing Zones in New York State
Source: The State of New York
Under the state’s reopening strategy, New York City restaurants are allowed to offer only outdoor dining or takeout and delivery. Cuomo said he plans to meet with Mayor Bill de Blasio and health officials to discuss how to reopen indoor dining in the city, and he will provide more details later this week.
However, there is still a looming concern that new, more contagious variants of the coronavirus first identified in the United Kingdom, South Africa and Brazil could take hold and threaten the state’s ability to treat an influx of Covid-19 patients.
“The new strains are a real concern, and the Covid threat is not over,” Cuomo said.
A recent study from the Centers for Disease Control and Prevention estimates that the variant found in the U.K., known as B.1.1.7, could become the dominant strain of the virus by March. So far, New York has identified 22 Covid-19 cases with the mutated strain, according to recent data compiled by the CDC.
However, the federal agency warns that figure is based on sampling and doesn’t represent the total number of B.1.1.7 cases that may be circulating.
Cuomo said that expanding the number of available hospital beds isn’t the state’s main concern, but rather the lack of health-care workers to treat a wave of new patients if they were to get infected with the virus themselves.
“Yes, it creates anxiety, and all I can tell you is that we watch it and we adapt,” Cuomo said. “If it changes, we will change.”
Brendan Kennedy, CEO of Tilray medical cannabis producer, poses in a greenhouse of the Canadian company’s European production site in Cantanhede, on April 24, 2018.
Patricia De Melo Moreira | AFP | Getty Images
Brendan Kennedy, CEO of Canadian cannabis company Tilray, is optimistic that the United States will take steps toward federal legalization of marijuana in the near future, a move that will shake the industry forever.
“I expect that pressure from the North and the South will ultimately lead the U.S. to implement a federal program here at some point in the next 18 to 24 months,” Kennedy said in an interview on CNBC’s “Squawk on the Street” Wednesday.
Earlier this month, Mexico published regulations for medical cannabis use and Kennedy is confident that Mexico and Canada’s positive stance on marijuana will put more pressure on the U.S.
Tilray announced Tuesday that it has been chosen as a supplier of medical cannabis for experimentation in France by the country’s National Agency for the Safety of Medicines and Health Products.
Since 2017, the company has been selling its cannabis products in Germany. With the French program getting underway in the first quarter, Kennedy is optimistic that other European countries will implement medical marijuana programs as well.
“While we are excited for our opportunities in Germany and France, we expect to see additional opportunities for our European businesses in the coming quarters,” Kennedy told CNBC in an interview.
Tilray has cannabis production licenses in Canada and Portugal, where their main cannabis facility is located.
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