Target Corp beat estimates for quarterly profit and sales on Wednesday as a strong vaccination drive across the country encouraged shoppers to return to its stores and spend their stimulus checks on home goods, clothes and other items.
One of the big beneficiaries of a pandemic-led shopping spree, Target has seen its winning streak spill over into 2021 as the reopening of the economy boosts traffic at its stores, while its e-commerce business continues to draw online shoppers.
Comparable sales at Target stores rose 18% in the first quarter, while digital sales surged 50%, driven largely by same-day delivery services, including Drive up, Shipt and in-store pick ups.
"There is much greater optimism as consumers see the economy improve, as they get vaccinated, as they see COVID counts begin to decline" Chief Executive Officer Brian Cornell said on a media call, adding he expects, both, increased traffic at Target stores and more people shopping on its website.
Strong results from Walmart, Home Depot and Macy's earlier this week also suggested that pandemic-weary shoppers were raring to go out and shop.
Shares of Target jumped 5% as overall comparable sales, including online, rose 22.9% in the quarter ended May 1, beating analysts' estimates of a 9.93% increase, according to IBES data from Refinitiv.
Apparel sales jumped about 60%, while comparable sales for food, beverages and essentials grew in low-to-mid-single digits, topping bumper sales from a year earlier when toilet paper and packaged foods flew off the shelves due to panic shopping.
The company also forecast positive single-digit comparable sales growth for the last two quarters of the year, while analysts were expecting a decline.
Target's total revenue rose 23% to $23.88 billion, beating estimates of $21.81 billion. Excluding items, it earned $3.69 per share, beating estimates of $2.25 per share.