Home Target Scores in Q3, Touts Holiday Inventory Levels
November 17, 2021
Target Scores in Q3, Touts Holiday Inventory Levels

By Mike Duff

Contributing Editor

After beating Wall Street estimates on sales and earnings, Target Corp. stated in a conference call that, despite inflationary pressures and supply chain bottlenecks, the company is prepared for the upcoming holiday season with a solid inventory position.

The company posted earnings of $1.49 billion, or $3.04 per diluted share, versus $1.01 billion, or $2.01 diluted share, in the 2020 quarter. Adjusted for one-time events earnings per diluted share were $3.03 versus  $2.79 in the year-before period. 

Target beat a Yahoo Finance-published analyst consensus earnings per share estimate of $2.83 as well as a revenue estimate of $24.78 billion.

Third-quarter comparable sales gained 12.7%, on top of 20.7% in the 2020 period driven entirely by traffic, Target reported. Store comps increased 9.7% while digital comparable sales advanced 29% in the quarter year over year. Stores fulfilled more than 95% of Target’s third-quarter sales, the company pointed out.

Same-day services, including order pickup, drive up and Shipt, have gained almost 60% this year, the company asserted, on top of 200% last year.

All five core merchandise categories, including home, delivered double-digit comparable sales growth, according to Target.

Net sales were $25.29 billion versus $22.34 billion while total revenues were $25.65 billion versus $22.63 billion in the year-earlier quarter, the company noted. Operating income was $2.01 billion versus $1.94 billion in the year-prior period.

In a conference call, Brian Cornell, Target chairman and CEO, said the company’s core categories experienced market share growth in the quarter. Going forward, the company is addressing supply-chain challenges, which are pushing up costs but Cornell said that Target “views them as a continuation of the many productive long-term investments we are making in our business in support of the trust we have built with our guests. And obviously, our guests responded to these efforts with strong third-quarter traffic, which we expect will continue in Q4 and beyond.”

Cornell said that Target is managing prices based on cost increases from vendors that are seeing their own operations subject to inflation and the desire to offer customers value. He said Target is taking a “guest first” approach to value while managing profits, one that has generated a positive shopper response.

“As a result, our business delivered strong third-quarter financial results from the top to the bottom of the P&L, while building on the trust we’ve established with our guests,” Cornell said, adding, “We’re excited and ready for the holiday season.”

In the home department, Christina Hennington, executive vice president and chief growth officer, said in the conference call, “low double-digit comp growth was led by seasonal and stationary categories, and reflected record-setting performance in the back-to-school, back-to-college and Halloween seasons.”

She added that, despite some gross margin pressure, the company has been buying to satisfy customers and felt “good about inventory levels into the holiday season.”

In announcing the financial results, Cornell said, “The consistently strong growth we’re seeing in our business, quarter after quarter, is a testament to the passion and commitment our team brings to serving our guests, and the trust we’ve built with them as a result. Following comp growth of nearly 21% a year ago, our third quarter comp increase of 12.7% was driven entirely by traffic and reflects continued strength in our store sales, same-day digital fulfillment services and double-digit growth in all five of our core merchandising categories. With a strong inventory position heading into the peak of the holiday season, our team and our business are ready to serve our guests and poised to deliver continued, strong growth, through the holiday season and beyond.”

 

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