A shopper leaves the Target Store on 34th St. with supplies as carpenter board up the Sephora story in New York on March 20, 2020. Target reported quarterly results Thursday.Mary Altaffer/The Associated Press
A surge in online sales for Target Corp. in March and April offset the bulk of damage done by coronavirus lockdowns to in-store sales, but its margins continue to suffer along with profit from higher costs, the retailer said on Thursday.
The big box retailer said digital comparable sales had surged over 275 per cent so far in April, with several days in the month recording more online sales than Cyber Monday, traditionally the busiest day for e-commerce companies.
However, the company expects margins to drop by 5-percentage points in the first quarter due to temporary wage increases of $2 an hour for store and distribution center workers as well as higher sales of low-margin products such as groceries. The company now plans to pay higher wages until May 30.
Target, along with Kroger and Costco, is among a few companies that has benefited from the spread of the pandemic.
Other players in retail, especially apparel chains and department stores, have taken a big hit from the pandemic, with some of them on the verge of filing for bankruptcy.
“Watching the retail industry decline is not something I enjoy, but I think going forward we’re going to see significant market share opportunities, across our apparel business,” Target Chief Executive Officer Brian Cornell said on a media call.
“That’ll be a benefit to us. But unfortunately, it will come at the expense of others who are closing their doors and potentially no longer operating in this future environment.”
A surge in online shopping more than made up for a mid-teens decline in comparable store sales for the company in April.
Overall comparable sales have risen more than 5 per cent.
Sales of food and beverage items rose over 12 per cent in April, while those of toys and electronics jumped over 30 per cent. In contrast, sales of apparel and accessories tumbled more than 40 per cent.
Target said quarter-to-date comparable sales have risen over 7 per cent, with digital sales more than doubling.
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