Food and beverage sales, along with e-commerce, helped drive year-over-year sales growth of 21.3% for Target in the third quarter of 2020.
Food and beverage sales growth was in the “high teens,” the retailer said, while digital comparable sales posted a 155% increased in Q3, among the highlights of Target’s financial results. Total revenue reached $22.66 billion driven by sales growth of 21.3% and an 18.1% increase in other revenue. Store comparable sales increased 9.9% year over year.
Operating income was $1.9 billion in third quarter 2020, up 93.1 percent from $1.0 billion in 2019.
During the the quarter, more than 95% of the retailer’s sales were fulfilled by stores, with basket size increasing by 15.6%, and traffic by 4.5%. The retailer also reported gains on services related to e-commerce, with Shipt deliveries growing by nearly 280%, and same-day order pickup growing by more than 50%. Same-day drive up delivery increased by more than 500%.
“Our strong results in 2020 reflect the benefits of our multi-year effort to build a durable and flexible model, with a differentiated assortment and a suite of industry-leading fulfillment options - all brought to life through the passion and effort of our team. As a result, we’ve seen a deepening level of engagement and trust from our guests. The result is unprecedented market share gains and historically strong sales growth, both in our stores and our digital channels,” said Brian Cornell, chairman and CEO of Target. “In preparation for the holiday season, we focused first on the safety of our guests and our team, making changes to eliminate crowds while enhancing our fast-growing, contactless options like in-store pickup, Drive Up and Shipt. In a holiday season that will feel different for our guests, we’re committed to helping them navigate the season safely, as they find new ways to celebrate with family and friends.”
During 2020 so far, Target has opened 29 small format stores, making this year the biggest year for small format openings.
Earlier this month, Target celebrated the one-year anniversary of its loyalty program, Target Circle, by offering its nearly 80 million members more ways to save this holiday season. Target also said that it is embarking on a "strategic, long-term partnership to transform the beauty landscape" by installing Ulta Beauty shops in Target stores. The “shop-in-shop” concept will offer established and emerging prestige brands online and in at least 100 select Target locations nationwide beginning next year. This is the first time that Target will offer prestige beauty brands, a major move for the company.
Target-owned Shipt, meanwhile, is offering Mastercard customers a holiday bonus. Through Dec. 15, anyone who pays for a pack of Shipt Passes with their Mastercard will receive an extra pass free.Earlier this year, Shipt began offering customers the ability to pay per order by purchasing Shipt Passes, allowing more flexibility than the annual membership plan and the opportunity to save up to 20% when purchasing multiple passes in a pack.
Target Circle members will have access to more offers this holiday season — from Black Friday Now to last-minute shopping — all in one place, with no membership fee required.
Minneapolis-based Target Corp. operates more than 1,900 locations.