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.
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.
|KR||THE KROGER CO.||45.66||-0.03||-0.05%|
|COST||COSTCO WHOLESALE CORP.||558.59||+3.51||+0.63%|
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)