Target Beats Q1 Expectations with Strong E-commerce Growth

This week big-box retailer Target beat first-quarter earnings and revenue expectations with help from its digital sales capabilities.

The company reported that e-commerce grew by 141% during the period.

For the first quarter, Target reported net income of $284 million, or 56 cents per share, down from $795 million, or $1.53 per share, last year. Adjusted EPS of 59 was ahead of the FactSet consensus of 44 cents.

Revenue at $19.62 billion was up from $17.63 billion last year and ahead of the FactSet outlook of $19.02 billion.

Comparable sales grew 10.8% as the average basket total climbed 12.5%. The company said this was due to more shoppers making fewer but bigger shopping trips.

According to Chairman and CEO Brian Cornell, the last few weeks of the first quarter ending May 2 were strong across many departments, fueled in part by shoppers spending during the novel coronavirus outbreak.

The retailer did not provide second quarter or full-year guidance.

Cornell said the company spent $500 million on coronavirus-related expenses, and recently extended wage increases. In comparison almart said it spent about $900 million, and Home Depot spent $850 million in the most recent quarter.

“We continue to include Target in the bucket of retailers that we believe will not only survive this pandemic but are well positioned to emerge as ongoing retail winners,” wrote Instinet analysts led by Michael Baker. “Sure, expenses were up and margins were downy ear over year. But we take the significant increase in comps, helped by a strong omnichannel solution, as a surer sign of the company’s success.”
Instinet rates Target stock buy with a $135 price target, up from $121.

Disclaimer: We have no position in Target Corporation (NYSE: TGT) and have not been compensated for this article.