Target (TGT) is scheduled to report results of its fourth fiscal quarter before the market open on Tuesday, March 2, with a conference call scheduled for 9:00 am EDT. What to watch for:
1. HOLIDAY PERIOD SALES: In January, Target said same-store sales rose 17.2% during the November/December holiday period, as traffic increased by 4.3% and average ticket rose 12.4%. Store-originated same-store sales rose 4.2%, while comparable digital sales rose 102%. Chief Executive Brian Cornell said strong sales trends continued into the new year. "Comparable digital sales growth was driven primarily by the company's same-day fulfillment services, which together grew 193%," the company said in a statement. "Of the services, Drive Up grew the fastest at more than 500%, while Target's sales fulfilled by Shipt grew more than 300%." Target said it grew market share in all five of its core categories of home, hardlines, electronics, food and beverage, beauty and essentials and apparel.
Baird analyst Peter Benedict raised the firm's price target on Target to $220 from $200 and reiterates an Outperform rating on the shares. While the stock may be due for a "near-term breather" after rallying 13% year-to-date and fundamentals will likely normalize at some point in fiscal 2021, Target's multi-category portfolio and suite of convenient same-day fulfillment options position the company for ongoing share gains post-pandemic, says the analyst. Meanwhile, DA Davidson analyst Michael Baker said that the "exceptionally strong" sales trends since early in the pandemic appear to continue for Target in spite of the economy moving further from the April stimulus. Deutsche Bank analyst Paul Trussell said the results showcased that Target is taking share across each of its merchandise categories and remains best in class in digital growth and same-day services
2. EXECUTIVE CHANGES: Target named its first chief growth officer and a new marketing chief in a management shuffle announced February 16. Christina Hennington, who was one of two chief merchants, is the executive vice president and chief growth officer, while Cara Sylvester was promoted to executive vice president and chief marketing and digital officer, replacing Rick Gomez, who will become executive vice president and chief food and beverage officer. "The depth of expertise across Target's leadership team in particular has been a critical driver in Target's winning strategy and the excellence of our operations," said CEO Brian Cornell.
3. COMPETITION: Costco's (COST) CEO recently said the company will pay its U.S. workers at least $16 an hour starting next week. The company's minimum U.S. wage has been $15 an hour, the same as the starting wage at Target and Amazon. com (AMZN). Rival Walmart (WMT) recently said it would increase wages for some workers but keep its starting wage at $11 an hour. Costco has approximately 180,000 full-time and part-time U.S. employees.
4. CONTINUED SHARE GAINS: On February 8, Stifel analyst Mark Astrachan upgraded Target to Buy from Hold with a price target of $225, up from $200, to reflect his view of continuing share gains across most categories, especially digital, where outperformance in same-day services has been "most notable." The firm's consumer spending survey indicates Target consumers are about 40% more likely to be users of at least one same-day service compared to overall respondents, which is notable given his view that same-day has a higher recurrence/usage rate than traditional shopping channels, said Astrachan.
Target
+3.57 (+1.94%)
Costco
+1.59 (+0.48%)
Amazon.com
+28.795 (+0.93%)
Walmart
+2.07 (+1.59%)