Target (NYSE:TGT) released a business update Wednesday that indicated a dramatic uptick in sales. In the press release intended to keep investors and other parties abreast of developments at the big retailer in the face of the COVID-19 coronavirus pandemic, the company revealed that its comparable-store sales have risen by more than 20% year over year so far in March.
This is an extremely high number for an established retailer. For comparison's sake, Target's comps dating from the fourth week of February through the front end of March (when the first stirrings of the coronavirus scare were felt in the U.S.) came in at 3.8%.
That 20%-plus rise is due to Target shoppers stocking up on groceries during the coronavirus threat and the stay-at-home measures it has triggered in many municipalities. The company said that comps in its essentials and food & beverage segment have increased by over 50% this month.
This performance won't necessarily shake out in widened profit margins, Target warned. "[S]tronger-than-anticipated quarter-to-date sales have led to gross margin dollar growth ahead of prior expectations," the company wrote in its update. "However, continued sales declines in higher-margin discretionary categories could result in lower-than-expected gross margin dollar performance for the remainder of the quarter."
Meanwhile, due to the great uncertainty over how the pandemic will play out, Target has withdrawn its sales, operating income, and earnings guidance for both the current quarter and for the entirety of 2020. It is also halting its share repurchases for now.
Investors might be focusing more on these negatives when approaching the high-profile consumer goods stock. Target's shares fell by over 9% on Wednesday, in sharp contrast to the gains of the wider market.