Target’s holiday sales rose 17%, e-commerce sales more than doubled

Target said Wednesday comparable sales rose 17.2% in November and December, as customers bought matching pajamas and gingerbread house kits to celebrate a cozy holiday at home during the pandemic. CNBC's Becky Quick reports. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Target said Wednesday comparable sales rose 17.2% in November and December, as customers bought matching pajamas and gingerbread house kits to celebrate a cozy holiday at home during the pandemic.

While online sales remained robust, shoppers also visited Target’s stores and spent more money per purchase than they did last holiday season. Combined transactions in Target stores and on its website rose 4.3% and average tickets grew by 12.3% year over year, the company said.

Target shares, which have a market value of about $100 billion, were recently trading down about 1% on Wednesday morning. Earlier, shares were higher, and touched an all-time high of $199.96. The stock has gained nearly 60% over the past year.

Stifel analyst Mark Astrachan said Target’s strong holiday sales surpassed consensus estimates, but the market’s reaction was muted because investors already had heightened expectations for the company’s performance.

The pace of Target’s sales growth slowed slightly compared with the gains it logged in fiscal third quarter and underscored the challenge that Target faces in the quarters ahead. As more Americans get vaccinated, the company will have to prove it can hold on to market share gains it made during the pandemic, even as consumers feel more comfortable making numerous trips to smaller stores or returning to malls.

In a research note, Astrachan said he expects the retailer will be able to keep up its e-commerce gains because its same-day services like curbside pickup save customers time.

The pandemic may permanently change the cadence of the holiday shopping season, too. Target said its stores will be closed on Thanksgiving Day 2021.

The retailer had opted to remain closed last Thanksgiving due to the health crisis. To spread out sales and thin crowds, Target began sales weeks before Thanksgiving, which previously had been the starting line for the search for gifts and stocking stuffers. It also put more of its deals online.

Target said comparable digital sales more than doubled in November and December compared with the year-ago period, while comparable store sales grew by 4.2%.

Target’s guidance includes only sales in November and December even though its fiscal fourth quarter won’t end until Jan. 31. It will report the full quarter’s results on March 2 at a virtual investor day.

Ahead of Wednesday’s news, analysts surveyed by Refinitiv estimated Target would earn $2.27 per share, after adjustments, on revenue of $26.67 billion.

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