The retailer reported a significant increase in sales in the first quarter of 2021 and increased consumer interest in its brands.
Last year, the main driver of sales for Target was online ordering, whose popularity increased after the coronavirus pandemic jumped by 141%. At the same time, the growth in interest in the delivery service over the past year was 90%. This year, amid a gradual return of consumers to physical stores, there was a 50% decline in online sales. However, this did not stop Target from setting a new record.
According to the company's report, in the first quarter of 2021, sales increased by 22.9% compared to the same period last year. At the same time, operating profit in the first quarter rose by 407% to $2.4 billion. It is noted that the growth was achieved mainly due to the physical stores on which the company's management made main bets. With the relaxation of quarantine and vaccination, customers are increasingly returning to the usual way of shopping in physical stores.
Time has shown that the decision to invest in the development of the network of stores - to open new stores in various formats, update existing stores and improve the quality of service - was the right one. As previously announced, Target plans to spend $4 billion annually on these issues. And this tactic fully justifies itself.
The report also highlights the increasing consumer interest in Target's brands, some of which are also gradually increasing. For example, the sports apparel brand All in Motion, introduced in January 2020, brought in more than a billion dollars in its first year in existence. Recently introduced brand Mondo Llama, which produces goods for creativity, has also aroused the lively interest of consumers.
Today, this retailer owns the most significant number of its brands, compared to Walmart and Amazon. For example, according to a report from the Profitero platform, Target's brands account for 27 percent of its food and beverage offerings. In household chemicals, that share is 21%, and health and beauty products account for 17%. It can be safely assumed that the number of the retailer's brands will only increase soon.
Target representatives are very optimistic, rightly expecting that further vaccinations, many holidays, and the beginning of the school year will contribute to an even more significant increase in-store traffic, and therefore the establishment of new sales records.
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