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Target plans to open 30 new stores this year and complete 30 remodels in this quarter, plus another 100 in the second half of the year.

Rebound at stores energizes Target’s first quarter

Same-day services fuel 50% digital sales growth atop 141% prior-year gain

In its fiscal 2021 first quarter, Target Corp. vaulted over pandemic-driven results a year ago, doubling its net and comparable sales growth and topping Wall Street’s earnings-per-share estimate by more than a dollar.

Target said Wednesday that net sales for the quarter ended May 1 totaled $23.88 billion, up 23.3% from $19.37 billion a year earlier. That was more than twice the growth in the 2020 first quarter, when the Minneapolis-based retailer saw net sales rise 11.3%.

Similarly, comparable sales in the 2021 first quarter jumped 22.9%, building on a 10.8% year-over-year gain in the 2020 quarter. Same-store sales climbed 18% versus growth of 0.9% in the prior-year period.


"Guests turn to Target because of our stores and our digital options, not one versus the other." — Brian Cornell, Target chairman & CEO


“The results we delivered in Q1 are nothing short of outstanding. Comparable sales grew by nearly 23%, making it our fourth consecutive quarter in which comp sales grew more than 20%. Maintaining that pace this quarter was especially notable, given that we were comping over double-digit growth a year-ago,” Target Chairman and CEO Brian Cornell told analysts in a conference call on Wednesday.

“Over the last two-years, comp sales have grown about 36%, and total sales have expanded by $6.5 billion in the first quarter alone,” he said. “This year, sales growth reflected more than $1 billion in market share gains, a clear signal of how relevant guests find our experience, even though they have many more shopping options available compared with this time last year.”

Stores showing strength

Target noted that the $1 billion in market share added in the 2021 first quarter came on top of a $1 billion share gain in first-quarter 2020. What’s more, over 95% of Target’s first-quarter sales were fulfilled by its stores.

“In a quarter featuring many things to celebrate, I’m most proud of the performance of our stores. With vaccinations rolling out across the country and consumers increasingly comfortable venturing out, we’ve seen an enthusiastic return to in-store shopping,” Cornell said. “Guests are happy to come back to our stores because they love the environment we created and invested in over time. As a result, our store comp sales increased 18% in Q1, driven almost entirely by higher traffic and accounting for the vast majority of our growth. Contrast that to a year ago, when the channel mix of our business was changing rapidly, with guests leaning heavily into our digital fulfillment options, especially our same-day services in the midst of a nationwide lockdown.”

Target stores saw a 17% traffic increase during the 2021 first quarter plus 5% growth in the average shopper basket on a comparable basis. By product category, comp sales were up low to mid-single digits in food and beverages and essentials, high teens in beauty, over 30% in hardlines and home, and more than 60% in apparel.

“Our essentials and food categories both delivered comps in the low to mid-single digits. To see healthy growth on top of last year is remarkable, as you’ll recall that a year ago, guests were aggressively stocking up their pantries, fridges and freezers, and we sold virtually every unit of paper goods that we owned,” Chief Growth Officer Christina Hennington said on the call.

“Beyond category strength, I want to pause and also highlight that sales of Target’s own brands grew approximately 36% in the first quarter, the strongest increase we’ve ever recorded,” Hennington pointed out. “Because of our unique capabilities in product design, development and sourcing, our own-brand products offer an unbeatable combination of design, quality and value. These brands aren’t something that our guests pick up while they’re at Target. They are a big reason why they shop at Target, which is why we continue to invest in them.”

Same-day services drive digital sales

On the e-commerce front, Target notched 50% gain in comparable digital sales in the 2021 first quarter, following up 141% growth a year before. But Cornell noted to analysts that the omnichannel dynamic — customers able to switch seamless between brick-and-mortar and online shopping — is what’s spurring strong growth at both ends.

“A year ago, on this call, we were highlighting a digital comp of 141%, driven by growth in our same-day services of more than 275%. These two contrasting scenarios clearly demonstrate the flexibility of our operating model, but they also show how our stores and digital channels complement each other to drive guest engagement,” Cornell explained. “Even though digital stole the headlines a year ago, our store comps actually increased about 1% in the first quarter last year. And this year, while store sales accounted for most of our growth, first-quarter digital comp sales also grew 50% on top of last year’s enormous numbers.

“Guests turn to Target because of our stores and our digital options, not one versus the other,” he said. “And for us, the distinction between a store sale and a digital sale is largely irrelevant. Because of our unique stores and hub model, more than three-quarters of our first-quarter digital sales were fulfilled by our stores. That means, in total, more than 95% of Target’s first-quarter sales were driven by our store assets, store inventory and store teams.”


Drive Up curbside pickup sales surged 123% in the first quarter and led 90% sales growth among same-day services.

Target’s same-day online services — Order Pick Up (in-store pickup), Drive Up (curbside pickup) and Shipt (home delivery) — tallied sales growth of more than 90% in the first quarter (versus 278% in the 2020 quarter), with Drive Up sales soaring 123% after over 600% growth a year ago. Likewise, Order Pick Up sales rose 52% (versus 100% in the 2020 quarter), and Shipt sales climbed 86% (versus 300% in the 2020 quarter).

“Sales in our same-day services — Order Pick Up, Drive Up and Shipt — have accounted for the bulk of our digital growth, and they grew to well over half of our digital sales in the first quarter. Same-day penetration has more than doubled since Q1 of 2019, when sales through these services accounted for less than a third of our digital sales,” Cornell said. “While all three same-day services continue to grow faster than overall digital, Drive Up has been a standout and consistently receives the highest ratings of anything we do. This service only accounted for about 5% of our first-quarter digital sales two years ago, and that ratio expanded to more than 30% this year. Put another way, in the first quarter alone, Drive Up sales have grown by well over $1 billion in the last two years.”

With the booming growth in same-day services, Target plans to adapt its stores to better accommodate online orders, according to Chief Operating Officer John Mulligan.

“Their growth over the last few years has been far above our expectations. This is most evident in our Drive Up service, where first-quarter sales volume was nearly 21 times higher than it was two years ago, amounting to nearly $1.3 billion of incremental sales volume over that period,” he said in the call. “In the face of this incredible growth, there are emerging opportunities in high-volume locations to invest in capacity and efficiency in support of our same-day services. Specifically, in more than 100 locations this year, we're investing in small projects to optimize the front ends of these buildings, freeing up additional capacity for continued same-day growth while making the layout more efficient and safer for the team.

“We also continue to enhance the assortments available for all three same-day services, adding more perishable food to our [Order] Pick Up and Drive Up services and more general merchandise like apparel to the assortment available through Shipt,” he added. “And we just announced that in the second quarter we’ll have adult beverages available through Pick Up and/or Drive Up in more than 1,200 stores and available for same-day delivery in more than 600 stores across the country.”

New and better stores on tap

Target finished the first quarter with 1,909 stores overall, up from 1,871 a year earlier. Over the past year, the retailer added one store of 170,000 square feet or more, five stores between 50,000 and 169,999 square feet, and 32 stores of 49,999 square feet or less.

“Within our store network, we’ve begun ramping up our remodel program, following the pause we implemented last year. We have just over 30 full remodels slated for completion in the second quarter and more than 100 planned for the back half of the year,” Mulligan said. “Based on past experience, we expect these remodeled stores will generate an incremental 2% to 4% sales growth in the year following completion, with another 2% incremental growth in the second year.”


Target executives noted the dedication of their retail associates in the strong brick-and-mortar store performance in Q1.

More than 30 new stores are slated to open this year. “We continue to find compelling opportunities in urban and dense suburban markets and on or near college campuses,” according to Mulligan. “In recent years, these custom formats have been less than 50,000 square feet. However, given the local real-estate conditions in dense suburban markets, we’re also finding compelling opportunities to open somewhat bigger stores between 50,000 and 100,000 square feet, which weren’t available in the past. As a group, these new stores are generating higher-than-average sales productivity, above-average gross margin rates and strong financial returns, and we see a very long runway to open more of them over time.”

Earnings above expectations

At the bottom line, Target turned 2021 first-quarter net income of almost $2.1 billion, or $4.17 per diluted share, compared with $284 million, or 56 cents per diluted share, a year earlier. In reporting 2020 first-quarter results last May, Target said the net earnings decline reflected “hundreds of millions of dollars” of incremental employee pay and benefits and COVID-19 safety investments for workers and customers.

Excluding a 53-cents-per-share gain on the sale of Dermstore and asset impairment charges of 6 cents per share from the consolidation of headquarters office space, adjusted net earnings per share for first-quarter 2021 were $3.69 versus 59 cents a year ago, Target reported.

Analysts, on average, had forecast adjusted EPS of $2.25, with estimates ranging from $1.61 to $2.98, according to Refinitiv.

Looking ahead, Target projects mid- to high-single-digit growth in comparable sales for the 2021 second quarter, as well as positive single-digit comp-sales growth in the third and fourth quarters.

“We learned a lot in the first quarter and, notably, got our first look at how our business is successfully comping the comp, with impressive growth on top of last years strong surge in sales. Also, and importantly, we’ve continued to gain market share on top of last year’s dramatic share gains,” Chief Financial Officer Michael Fiddelke told analysts. “Based on these results, we’re now planning for our business to deliver a mid- to high-single-digit comp increase in the second quarter. This expectation is in line with the two-year growth rates we saw in the first quarter. And while we only have a couple of weeks in the [second] quarter behind us, the results we’ve seen so far this month are consistent with this outlook.”

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