A surge in online sales for Target Corp in March and April offset the bulk of damage done by coronavirus lockdowns to in-store sales, but its margins continue to suffer along with profit from higher costs, the retailer said on Thursday.
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The big box retailer said digital comparable sales had surged over 275% so far in April, with several days in the month recording more online sales than Cyber Monday, traditionally the busiest day for e-commerce companies.
However, the company expects margins to drop by 5-percentage points in the first quarter due to temporary wage increases of $2 an hour for store and distribution center workers as well as higher sales of low-margin products such as groceries. The company now plans to pay higher wages until May 30.
Target, along with Kroger and Costco, is among a few companies that has benefited from the spread of the pandemic.
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Other players in retail, especially apparel chains and department stores, have taken a big hit from the pandemic, with some of them on the verge of filing for bankruptcy.
"Watching the retail industry decline is not something I enjoy, but I think going forward we're going to see significant market share opportunities, across our apparel business," Target Chief Executive Officer Brian Cornell said on a media call.
"That'll be a benefit to us. But unfortunately, it will come at the expense of others who are closing their doors and potentially no longer operating in this future environment."
A surge in online shopping more than made up for a mid-teens decline in comparable store sales for the company in April.
Overall comparable sales have risen more than 5%.
Sales of food and beverage items rose over 12% in April, while those of toys and electronics jumped over 30%. In contrast, sales of apparel and accessories tumbled more than 40%.
Target said quarter-to-date comparable sales have risen over 7%, with digital sales more than doubling.
(Reporting by Uday Sampath in Bengaluru; Editing by Anil D'Silva)