Target (TGT 0.76%) is coming off of a remarkable year in 2020. For example, Target's sales growth of $15 billion in 2020 was more than its growth over the past 11 years combined. That's how impactful the effects of the coronavirus pandemic were on this discount retailer.

Not that it has been alone in reaping these kinds of benefits: Home Depot, Walmart, and Costco are all retailers that experienced surging sales related to the pandemic. However, this quarter may be the last in which these retailers benefit substantially from that tailwind. As more people are getting vaccinated against the coronavirus, states are easing business restrictions, giving consumers more options for where they can spend their money.

That's why when Target reports first-quarter earnings on Wednesday, May 19, comparable-sales figures are what investors -- and potential investors -- will need to know.

A miniature shopping cart in front of a laptop computer

Image source: Getty Images.

Can Target keep customers' interest as they gain spending options?

Impressively, in its fourth and most recent quarter, Target increased comparable sales by 20.5%. Overall revenue reached $28.3 billion, capping off an unprecedented year of 19.3% comparable-sales growth for the company. That kind of growth will almost certainly not be duplicated in 2021, as states ease business restrictions.

Still, accompanying the sales growth came market-share gains totaling about $9 billion in 2020. In other words, a large part of Target's revenue gains in 2020 was from its competitors and not solely because of the pandemic. That's important, because revenue resulting from market-share gains can be sustained longer than revenue from an unusual business environment.

Moreover, large investments Target made several years ago are paying off today. For example, rather than spend money to build fulfillment centers, the company invested in upgrading its existing stores to expand capabilities. CEO Brian Cornell touched on this contrarian decision in the fourth-quarter conference call, saying:

"Instead, we went our own way, built a fulfillment model with our guests' local store at the center, and took the initiative on same-day. We could just as easily have constructed additional fulfillment centers and driven the shift to digital sales with more ship-to-home capacity, but as you know, the economics were terrible, and we wouldn't have been differentiated."

Customers are responding well to Target's investments. In addition to robust revenue growth, Target Circle, a free-to-join rewards program started two years ago, grew to reach 90 million members as of Jan. 30. The program will allow Target to closely observe those customers' shopping behavior and respond quickly to changes -- an ability that will prove useful in a year in which consumer behavior will readjust as pandemic restrictions continue to ease.

What this could mean for investors

Analysts on Wall Street expect Target to report quarterly revenue of $21.76 billion and earnings per share of $2.21, which would be increases of 14.3% and 375%, respectively. If the quarter plays out as expected, the revenue growth rate will be a slowdown from the previous quarter. Still, it will mean robust growth and could indicate a good start for 2021.

Target share prices are up 19.4% year to date -- partly due to investor optimism that the company can retain a large part of the customer spending it gained during the pandemic. But despite the share-price gains, the stock is trading at a reasonable 24 times trailing earnings. Investors looking for a stock they can buy and hold for the long term can add Target to their portfolios.