Target (NYSE:TGT) says first-quarter sales in stores and online have risen sharply because of the coronavirus pandemic, but they're mostly concentrated in essential goods and foods, while apparel and accessories are falling hard.
Although it withdrew its first-quarter guidance, the retailer provided an update on Thursday to highlight factors that are going to reduce its profitability for the period.
Hoard, then buy more
Sales have been all over the place as consumers reacted to the COVID-19 outbreak, first with panic buying, then with more-measured purchases.
February comps were up 3.8% overall. But around the middle of March, following the virus being declared a pandemic, Target saw sales surge in essentials and food and beverage categories. As the month progressed, though, in-store sales softened while online sales continued rising so that for the full month, where store comps were higher by mid single digits, the retailer's digital channels saw comps double.
Same-store sales for essentials and food and beverage were up 40% year over year, and hardlines (electronics, for example) were 20% higher for the month. Home products, however, fell by low single digits, and apparel and accessories plunged 30% from the year-ago period.
April seems to be more of the same, but while in-store comps are down by mid-teen percentages so far, online sales are galloping 275% higher. Gains are now focused in hardlines, with comps up 30%, while essentials and food and beverage are 12% higher. Home goods have reversed course and are now higher by high-teen percentages.
The decline in apparel continues unabated, though, with comps down 40% from last year.
Target CFO Michael Fiddelke says the crisis will affect profitability in the short term, but "we expect to have the financial capacity to emerge from this crisis in a position of strength."