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Target, TJX Sales Surge as Shoppers Return — Update

By Sarah Nassauer and Suzanne Kapner 

Target Corp., Lowe's Cos. and the owner of T.J. Maxx reported robust sales and a jump in store visits during the spring, as Covid-related restrictions eased and people returned to shopping at physical stores.

The strong results posted Wednesday followed similar reports earlier this week from other national chains, including Home Depot Inc. and Macy's Inc. Many of these retailers benefited during the pandemic from being able to stay open and the shift to online orders, or they are now capturing pent-up demand as they reopen.

"The first quarter felt like a first step towards a post-pandemic world, " said Target Chief Executive Brian Cornell on a call with analysts Wednesday. "With vaccinations rolling out across the country and consumers increasingly comfortable venturing out, we've seen an enthusiastic return to in-store shopping," he said.

At Target, comparable sales -- those from stores and digital channels operating for at least 12 months -- rose 23% from a year earlier in the quarter ended May 1. The growth rate was twice that of the same quarter last year when people rushed to buy food and household staples early in the pandemic.

Larger rival Walmart Inc. reported comparable sales rose 6% in its latest quarter, a slightly smaller gain than in the year-earlier period. Walmart executives said sales benefited from government stimulus checks and pent-up consumer demand.

TJX Cos., which owns T.J. Maxx, Marshalls and HomeGoods, reported on Wednesday comparable sales for stores that are open grew 16% from the same period in 2019 and net sales gained 8.7% from 2019.

Strong sales, particularly of apparel, signaled that consumers are "beginning to resume more normal activities," said TJX Chief Executive Ernie Herrman. He said sales trends for the start of the second quarter remained strong.

TJX suffered during the pandemic because only a small portion of its sales are digital. Comparable store sales for stores that are open at the division that houses T.J. Maxx and Marshalls, which mainly sell apparel, increased 12% in the latest quarter, while its HomeGoods division posted 40% growth from 2019.

Lowe's said its comparable sales rose 26% in the quarter ended April 30, as people continued to buy home-improvement items, one of the biggest product category winners during the pandemic. Home Depot's most recent quarterly comparable sales were up 31%.

Target booked gains across categories, while its results also suggested changes in buying behavior as more people ventured out or hosted social events. Apparel sales rose more than 60%, Target said, and sales of home goods and hardlines, such as small appliances, rose more than 30%. Sales of food and home essentials, big winners last year, increased by a few percentage points.

The company's overall sales through digital channels increased 50% in the most recent quarter, a slowdown from the same period last year when sales grew 141%. Store visits rose 17%, year over year.

Target reported quarterly earnings of $2.1 billion, up from $284 million a year earlier, lifted by strong sales of higher margin items such as apparel and store brands. Total revenue rose 23% to $24.2 billion.

For the current quarter, Target expects comparable-sales percentage growth in the mid-to-high single digits.

Worker shortages affecting many retailers and restaurants aren't being felt at Target, Mr. Cornell said, because of wage investments and other worker benefits. Target raised pay for hourly workers to at least $15 an hour last year.

Write to Sarah Nassauer at sarah.nassauer@wsj.com and Suzanne Kapner at Suzanne.Kapner@wsj.com

 

Corrections & Amplifications

This item was corrected at 8:48 p.m. ET to reflect that TJX Cos. said first-quarter comparable sales for stores that are open grew 16% from the same period in 2019 and net sales gained 8.7% from 2019. The original version incorrectly compared this year's first-quarter sales to 2020, rather than 2019, and did not make the distinction between comparable store sales and net sales in the sixth paragraph. In addition, in the eighth paragraph, comparable store sales for stores that are open at the division that houses T.J. Maxx and Marshalls increased 12% in the latest quarter, while its HomeGoods division posted 40% growth from 2019. The original version did not specify that the figures were for comparable sales and incorrectly compared the latest results to 2020, rather than 2019.

(END) Dow Jones Newswires

May 19, 2021 12:35 ET (16:35 GMT)

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