Target Corp.'s third-quarter sales show that pandemic-driven shopping is still surging heading into the holidays.
The Minneapolis company reported Wednesday that its online sales surged 155% in the three months that ended Oct. 31. Sales at its stores opened for a least a year rose 10%. Customer traffic rose 4.5% and average dollars spent rose nearly 16%.
Comparable sales, combining store and online sales, a critical gauge of success for retailers, jumped 20.7% from a year earlier, the retailer said Wednesday in a statement. That's almost double the estimate of 11.6% growth from Consensus Metrix, although down from 24.3% in the second quarter.
It joined Walmart and Home Depot in reporting strong third-quarter sales.
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The results were "exceptionally strong," Chuck Grom, an analyst with Gordon Haskett, said in a note. "It's clear that Target is not only gaining new customers but also retaining them, which will be critical as we move into 2021."
Chief Executive Officer Brian Cornell said that Target is capturing market share as more shoppers use the company's website and in-store pickup options. The retailer is seeing growth in categories such as electronics, home decor, apparel, and food and beverages, and executives said they see shopping continuing right through the end of the holiday season.
"Home continues to be a focal point," Cornell said. "With all that time at home, guests are cooking more and replacing home decor."
The shares rose 2.34% to $166.85 in New York, reaching new all-time highs. Target climbed 27% this year through Tuesday.
The company earned $1.01 billion, or $2.01 per share, for the quarter. That compares with $714 million, or $1.39 per share in the year-ago period. Adjusted earnings per share were $2.79.
Analysts expected $1.60 per share on $20.79 billion in sales, according by FactSet.
Its total sales rose 21.3% to $22.34 billion.
Target also says that it has gained more than $6 billion more in market share so far this year. Consumer electronics enjoyed more than a 50% sales gain in the quarter, while Target's home-goods business increased in the mid-20% range.
[Video not showing up above? Click here to watch » https://www.youtube.com/watch?v=9BtC81kKnEo]Clothing posted sales of nearly 10%, while beauty, food and beverages increased in the high-teen percentage range.
Echoing what fellow big retailers Walmart Inc. and Home Depot Inc. reported on Tuesday, Target said customers were buying more per visit in the quarter. Unlike Walmart and Home Depot, which reported higher spending on fewer visits, Target said store traffic actually grew in the three months ended Oct. 31.
Margins were helped by fewer price markdowns, although that was partially offset by costs related to the company's push into e-commerce. The cost of sales, meanwhile, jumped 20% in the period -- a reflection of the price that companies are paying in 2020 for protective gear and more frequent store cleanings.
Like other retailers upended by covid-19, Target has been using its stores more as minidistribution centers for its booming digital business to better fulfill online orders. The company also remains bullish on its small-format store strategy, and said it has room to boost sales per square foot: The average is in the high-$300 range, but some locations do more than $500.
As the critically important holiday period hits the U.S., the industry is bracing for a shopping season that looks drastically different from those of previous years.
Target, which will be closed on Thanksgiving Day, is relying more on e-commerce this year. Retailers have started advertisements earlier than ever to limit store crowds, while taking additional measures such as limiting customers who shop in person, and adding pickup parking spots. Target began its holiday sales more than a month ago -- but it doesn't believe the drawn-out shopping season will leave December barren.
Cornell said he expects holiday sales to be strong, especially in categories such as toys and electronics.
"It's important to be able to celebrate the holidays in some way," Cornell said. Consumers "have started to shop earlier, but they still have a very long shopping list they have to fulfill."
Target still isn't back to its pre-covid inventory levels, and may face inventory pressure as consumers continue to stock pantry shelves. As for 2021, the retailer is unable to provide a forecast. Next year "doesn't get any clearer" because of the pandemic, Chief Financial Officer Michael Fiddelke said on the earnings call.
Information for this article was contributed by Leslie Patton of Bloomberg News and by Anne D'Innocenzio of The Associated Press.