Will Target and Walmart top 2020’s record results in 2021?
Strong, better than expected first quarter sales and earnings results for Target and Walmart may be further proof that, for most every rule (or widely held belief), there are exceptions.
Target posted a 22.9 percent jump in same-store sales on top of 10.8 percent growth last year as both its physical and digital revenue generators climbed higher. Physical store locations recorded an 18 percent gain on top of just under one percent growth in 2020. The chain’s same-day services (Order Pickup, Drive Up and Shipt same-day delivery) rocketed up more than 90 percent, with Target’s curbside offering growing 123 percent. More than 95 percent of the retailer’s digital sales were fulfilled by its stores.
Walmart’s comps for its U.S. stores were up six percent on top of record results last year, with its e-commerce sales up 37 percent, more than double what the retailer was generating just two years ago.
Both Target and Walmart raised their financial guidance for 2021 based on the strength of their first quarters but also based on the belief that they are well positioned to meet the needs of American consumers at a time when shopping behaviors have changed and the economy appears set for its strongest performance in perhaps decades.
Conventional wisdom maintains that retailers that posted record results in 2020 as a result of being labeled “essential” during the novel coronavirus pandemic will likely take a step back in 2021. This thinking is based on a number of factors, starting with last year’s hard to replicate astronomical gains.
It is also based on the assumption of a return to normalcy with consumer demand and product supplies being aligned, thereby avoiding 2020’s turbulence. It is further expected that we will see a shift in spending, as dollars previously spent for groceries at home, for example, go to restaurants.
As 2021 moves closer to the half year mark, retailers have benefited from the money Americans received from President Biden’s $1.9 trillion CARES Act. Mass COVID-19 vaccinations have also given millions of consumers a further boost of confidence as they return to normal activities without mask requirements.
- Target Corporation Reports First Quarter Earnings – Target Corporation
- Walmart Releases Q1 FY22 Earnings – Walmart
- Target (TGT) Q1 2021 Earnings Call Transcript – The Motley Fool
- Walmart (WMT) Q1 2021 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: What is your current assessment of what the 2021 retailing year will look like? Where do you see the greatest opportunities for Target and Walmart to further improve their sales, profit and market share numbers?