Target
Target's impressive results weren't exactly a surprise given recent earnings reports from Amazon
Target topped already-lofty expectations. While Walmart warned that it was seeing a loss of momentum as the boost in unemployment benefits expired, Target noted that it hadn't noted any such drop off. Part of this is probably due to Target's demographic being more upper-middle-class shoppers.
Inside the Numbers
Target achieved new records for same-store sales and e-commerce which resulted in profits increasing by 80.3% to $1.7 billion. Same-store sales increased by 24.3% versus expectations of a 7.6% increase, and e-commerce sales increased by 200% on a year-over-year basis.
Earnings per share were $3.38 which easily beat analysts' expectations of $1.62 and was 80% higher than last year's $1.82 per share. Revenue was also higher at $23 billion vs $20.1 billion expected and $18.4 billion last year.
On the conference call, Target noted that traffic to stores and the website was up, the average purchase was more, and the number of transactions increased in stores and online. It was an ideal quarter. During the first quarter, sales were strong but there were fewer high-margin items purchased. That reversed this quarter as electronics sales increased by 70%.
And, it's further validation that the company's e-commerce strategy is working. Curbside pickups increased by 700%. E-commerce customers increased by 10 million.
It was late to the game but has been catching up to Amazon and Walmart. It's differentiated itself by having fewer sellers on its platform which makes its website easier to navigate with higher-quality control.
Stock Price Impact
Target didn't give any forward guidance but did say that same-store sales and online sales' momentum were continuing into August. It did say that 66% of kids won't be going back to school which could impact its sales on a seasonal basis due to higher comps from last year's back to school shopping.
TGT's stock is now up 70% from its March bottom which makes it one of the best-performing retailers except Amazon. It's growing much faster than Walmart. While people are paying more attention to Walmart's growth in online sales, its same-store sales have been quite weak and lagging the overall growth of retail spending over the last decade.
Despite this big gain in its stock price, Target remains cheaper than Walmart on a forward price to earnings basis. It also has more opportunity for growth in terms of adding locations. It would be ironic that while Walmart was obsessed with taking on Amazon, its real threat would turn out to be Target.