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Target Boosts Holiday Sales During Covid-19 Pandemic

Target reported its winter holiday sales “rose solidly as more shoppers bought goods online, adding to a series of strong results from the retailer during the Covid-19 pandemic,” WSJ reports.
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Target reported its winter holiday sales “rose solidly as more shoppers bought goods online, adding to a series of strong results from the retailer during the Covid-19 pandemic,” WSJ reports.
 
Why It Matters: While retailers have mixed results to show for the usually lucrative period, Target, and other large retail firms, have had good fortunes during the pandemic, primarily those who stayed open during the early part of lockdown or sell food, home goods or other essential products for those staying home. But for the top performers, having “robust e-commerce businesses already in place before the pandemic” has proved vital as more shopping transitions online.
 
Numbers To Consider:

  • Comparable Sales For November and December (Store or Digital Channels Operating For At Least 12 Months): +17%
  • Store-Based Sales: +4.2%
  • Digital Sales: More Than Doubled
  • Target said around 95% of the company’s sales in the period were sourced from stores. 

Comparables:

  • Lululemon raised its Q4 guidance after a strong holiday season.
  • Bed Bath & Beyond’s comparable sales rose 2% on the year.

What To Expect: “A clearer picture of holiday sales will emerge Friday when the U.S. releases retail sales figures for December.”
 
A Shifting Business: Many retailers opened the holiday deal season early this year to reduce in-store crowding and manage the strain on e-commerce supply chains. Target plans to carry that trend into 2021 after the “revised promotional calendar proved effective.” Target was one of many retailers to close on Thanksgiving and announced it will do so again in 2021.

Justin Oh:

Target ($TGT) is trading for 12.7x forward EBITDA and a 3.75% free cash flow yield. Given this is twice the valuation of where it’s traded in 2018-2019, this stock does not pass my initial smell test.

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