Target had a blowout quarter, but that's not the full story
Posted November 18, 2020 12:23 p.m. EST
CNN — Target said Wednesday that sales surged during its most recent quarter, but warned of risks from the pandemic and the state of the economy heading into the pivotal holiday shopping stretch.
There are "continued headwinds facing the consumer and the economy," including "uncertainty around the path of the pandemic and continued elevated levels of unemployment," Target chief financial officer Michael Fiddelke said on a call with analysts.
Added Target chief executive Brian Cornell: "We unfortunately don't have that crystal ball as we look to the future. We're all looking for greater certainty. But we know we're going to go into the first half of 2021 facing the continued pandemic, waiting for vaccines [and] looking for greater clarity around the condition of the economy and unemployment."
The federal government had been providing an additional $600 in weekly unemployment benefits to people who lost their jobs during the pandemic, but benefits lapsed at the end of July. Congress has remained deadlocked on a new stimulus package to boost the economy. Meanwhile, the coronavirus is spreading rapidly across the country. For at least 15 days in a row, the United States has reported more than 100,000 new daily infections.
To be sure, Target has deftly navigated the pandemic, as customers head to its stores and increasingly shop online for food and essentials, electronics, home goods and apparel. Target leaders said that the company has benefited from consumers consolidating their trips to stores that sell a wide variety of goods, and also from people shifting their spending away from travel and leisure into purchases such as electronics and home decorations.
Sales at Target stores open at least one year increased 20.7% during the three months ending October 31, compared with the same period last year. Target's digital sales, including its curbside pickup and home delivery options, increased 155%.
However, those figures were down slightly from Target's previous quarter ending August 1. Big box rival Walmart on Tuesday also reported slowing sequential sales growth during its most recent quarter, and Walmart CEO Doug McMillon said it was "imperative" that Congress pass a new stimulus package.
Adding to the mixed picture, US retail sales grew at a slower pace last month than economists had predicted, prompting worries about a difficult winter for stores.
Retail sales increased a tepid 0.3% to $553.3 billion on a seasonally adjusted basis in October from the previous month, the Census Bureau reported Tuesday. That came in below expectations of a 0.5% increase, and it's down from a revised 1.6% in September.
The data shows "the slowest pace of growth since the sharp contractions when the pandemic first hit," Deutsche Bank's Jim Reid told clients Wednesday. "The soft reading will add to concerns with the coronavirus case numbers surging once again."
—CNN Business' Anneken Tappe and Julia Horowitz contributed to this article.