Coronavirus-panicked shoppers are giving Target a boost in same-store sales this month.
The Minneapolis-based retailer announced today that its comps in March so far have been up more than 20% from the same period the previous year as the COVID-19 outbreak continues to spread across the United States. Although the apparel and accessories department is down 20%, the essentials as well as food and beverage categories have seen sales jump upwards of 50%.
”We are prioritizing the work that’s in front of us to support our team, store operations and supply chain as families across the country rely on Target for everything they need in this challenging environment,” Chairman and CEO Brian Cornell said in a statement. “Over the past few weeks, we’ve experienced an unprecedented surge in traffic and sales, as guests rely on our stores and same-day services. Ensuring we can take care of our team and deliver for the millions of guests who are counting on us remains our top priority.”
For the first three weeks of its fiscal first quarter, which began on Feb. 2, Target’s comps and category mix were in line with expectations and its previous financial outlook. However, in the fourth week of February and into the first part of March, the company saw a surge in traffic and same-store sales, particularly in the essentials categories as well as home office and entertainment. It ended the month of February with comps up 3.8%.
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Amid the pandemic, Target has suggested that it would focus its business on providing food, medicine, cleaning products, pantry stock-up items and other essential products to customers. It has also adjusted the timing of some of its ambitious growth initiatives, including trimming down this year its remodeling program from 300 to 130 outposts and opening 15 to 20 new small-format stores instead of the previously announced 36 stores. The remaining projects will be moved to next year.
Target also announced today that it has withdrawn its guidance for the first quarter and full year, as well as suspended share repurchase activity, given the uncertainties surrounding the pandemic. The company is anticipating more than $300 million in additional first-quarter costs, driven by the increase in worker pay and benefits, more merchandise volume and investments in rigorous cleaning procedures in stores and distribution centers during the crisis.
“During these unprecedented times, the benefits of our strong balance sheet and diverse, multi-category assortment are particularly important,” said EVP and CFO Michael Fiddelke. “With the best team in retail focused on serving our guests, and ample financial capacity to navigate a highly uncertain outlook, we are confident that Target will emerge from the current environment with an even stronger guest relationship and continue to operate from a position of financial strength.”
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