Target's revenue surged as customer demand grew beyond staples to include discretionary goods amid the lockdown. The retailer's quarterly online sales vaulted 141%. They snowballed every month, expanding from a 33% increase in February to 282% in April.
At the start of the quarter, consumers flocked to Target stores to stockpile staples and cleaning products. Then, the lockdown got extended, and consumers got stimulus checks from the government. Shoppers used them to buy discretionary goods, and Target now expects demand for beauty products, home goods and clothing to continue into the current quarter.
Consumers made fewer trips to stores but stuffed more items into their shopping carts. That helped boost comparable sales nearly 11%.
But operational costs soared. in the latest quarter. Target had set aside nearly half a billion dollars so it could maintain safety standards at stores and pay employees higher wages for working through the pandemic. As a result, its earnings plummeted but still crushed analysts' lowered expectations.
Investors took profits on Target shares Wednesday morning, whittling away at their 12-month gain of 68%.