Customer Loyalty Helped Target to Reach Formidable Results

Retailers including Walmart, Home Depot, and Target reported strong first-quarter results. Target’s fiscal first-quarter sales rose 23%, as investments the company made in exclusive brands and services like curbside pickup boosted customer loyalty and kept them coming back. Shares were up about 3% in premarket trading on May 19.

The company is benefiting from rising vaccination rates, a reopening economy and busier social calendars. Clients gravitated to new merchandise, especially clothes.

Thanks to good results, the retailer offered a second-quarter forecast that was well above Wall Street expectations. Retailers including Target reached great results, but the company had unique advantages before the pandemic that kept its business busy during the health crisis. Target fulfills nearly all of its online orders at stores, which improved Target’s profits. The retailer launched and grew numerous private label brands, which set it apart from other companies. Target was also ahead of other companies in raising employee wages.

Target and its market share

The retailer’s net income rose to $2.1 billion, or $4.17 per share, from $284 million, or 56 cents per share, a year earlier. Excluding items, Target earned $3.69 per share higher than the $2.25 per share expected by analysts.

In the early days of the pandemic, the company saw profits plummet and labor costs balloon as clients started to spend less money on merchandise, like apparel and accessories.

Hopefully, shoppers are once again spending on apparel and home goods. The company was also able to sell more of its own private label brands. Total revenue rose 23% to $24.2 billion from the same period of time in 2020.

The company picked up $1 billion in market share in the three-month period, on top of the about $9 billion in market share last fiscal year.

Target’s comparable sales rose 22.9% compared with a year earlier. That was significantly more than the 10.7% expected by analysts.

Curbside and in-store pickup as well as Shipt home delivery were popular options during the pandemic for safety reasons. Sales through same-day services gained more than 90% in the three-month period. In-store pickup sales grew 52%, while sales through Shipt gained 86%.

Apparel was the company’s strongest merchandise category in the quarter, sales increasing about 60% versus the year-ago period. Hardlines, is a category that includes items like consumer electronics as well as sports equipment. It grew in the high 30% range and home sales grew in the mid-30% range.