Target sales soar as US shoppers splash free cash
AMERICAN retail giant Target posted a 24pc increase in second-quarter sales, the biggest rise in its 58-year history, as consumers in the United States spent their extra cash on clothes and video games rather than travel and eating out during the pandemic.
The record surge was driven by online sales, which tripled during the period, while in-store sales also remained robust. Overall like-for-like sales jumped 24.3pc in the three months to the beginning of August, smashing analyst expectations of an 8.2pc increase, while total revenue rose 24.7pc to $23bn (£17.4bn).
Demand has remained strong since lockdown restrictions were eased, Target said, with consumers using the $1,200 stimulus cheques issued to most Americans under the government’s Covid relief plans to purchase items such as tablets and beauty products.
On Tuesday, rival Walmart said that the government handouts lifted sales in its second quarter, but the benefit faded by July.
In contrast, Brian Cornell, Target chief executive, said: “The stimulus was a factor, but even as it waned we saw strong comparable sales growth in June and July … and we are off to a very solid start in August.”
Discretionary cash that would usually go to travel and eating out was being spent on retail as a result of the pandemic, he said.
“The biggest change we saw from the first quarter to the second … was exceptional growth in in-store shopping in an environment where many Americans were turning to digital to fulfil their needs,” Mr Cornell added.
The strong performance outshone Walmart, which posted solid results thanks to a similar rise in ecommerce sales. Both retailers were allowed to stay open during the height of the crisis because they also stock groceries and toiletries.
However, Target echoed its bigger rival in saying that the start to the key back-to-school season had been slow due to uncertainty around when students will go back to classrooms.
Target shares jumped more than 12pc in New York to close at a record high above $154.