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Target redoes year's plan as sales surge 20% mainly because of coronavirus

Kavita Kumar, Star Tribune (Minneapolis) on

Published in Business News

MINNEAPOLIS -- Target's sales have spiked more than 20% this month from people stocking up on food and household supplies, yet the disruption caused by the coronavirus means the retailer is putting on hold or postponing its plans for the year, Target CEO Brian Cornell said.

The Minneapolis-based company will scale back the number of remodels and new stores opened, as well as adding fresh groceries and alcohol to its pickup services.

In doing so, he said the company hopes to minimize potential disruptions at a time when employees are hustling to restock shelves, sanitize checkout lanes and fulfill a record number of Drive Up and in-store pickup orders during this "unprecedented time," Cornell said.

"We need to be disciplined about making sure our stores and supply chain can focus on serving our guests without any unnecessary distractions, knowing that we'll need to prioritize the flow of food, medicine, and other essentials for the foreseeable future," Cornell told reporters.

As the COVID-19 crisis has unfolded, many department stores, specialty retailers, restaurants and bars have shut down for at least two weeks. But retailers such as Target, Walmart, Costco and groceries that sell food, medicine and other essentials have remained open and have been seeing a deluge in shopping -- and in some cases hoarding -- that has led to frequently empty shelves of items like frozen chicken, disinfectant wipes and toilet paper.

"A surge in stock-up shopping really set in at the end of February and in the weeks since then there's been a prolonged surge," Cornell said.

 

While Target's comparable sales in February, up 3.8%, were fairly in line with expectations, he said sales and traffic have accelerated in March, with categories such as food, beverage and household supplies skyrocketing 50%. In addition, he said the company has seen strong sales in office supplies, crafting items, small kitchen appliances and other in-home activities as more families work, eat and stay at home.

Meanwhile, overall apparel sales are down more than 20% this month, which could hurt Target's gross profit margins since those tend to be more profitable.

On Wednesday, Target also announced stepped-up safety measures to what it had already rolled out in recent weeks as both employees and customers are on heightened alert about their risk of catching the virus. It will temporarily stop selling and packing items into reusable bags. If customers still want to use their own bags, they will be asked to pack them themselves.

Target also will discontinue accepting returns for three weeks, while giving an extended return window afterward once that suspension is lifted.

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