Target’s investments in new delivery and pickup initiatives to counter Amazon’s growing logistics operation are paying off, as they accounted for 80 percent of the company’s e-commerce’s sales growth in the third quarter.
Revenue: The company brought in $18.7 billion in revenue in the quarter, up 4.7 percent over the prior year. Analysts expected Target to post revenue just shy of $18.5 billion. Target noted that comparable sales are up nearly 10 percent over the last two years.
Profit: Earnings per share of $1.36 were well ahead of Wall Street expectations of $1.19 per share. Profits spiked 25 percent over a year ago, leading Target to raise its expectations for the rest of the year.
E-commerce: Target’s digital side saw a year-over-year revenue rise of 31 percent. Drivers of that growth were same-day delivery through Shipt — the company Target acquired for $550 million in 2017 — in-store online order pickup and Drive Up service for retrieving online orders.
Despite the rapid expansion of its digital offerings, Target still has a lot of room to grow in that area. In the third quarter, e-commerce represented only 7.5 percent of the company’s overall sales. However, the digital side accounted for roughly 38 percent of overall revenue growth in the quarter.
Store footprint: Target finished the quarter with 1,862 stores — up from 1,846 a year ago — totaling more than 240 million square feet. Almost all of Target’s store growth has come from small format stores of less than 50,000 square feet.
Target is one of several major retailers using its massive portfolio of stores to offer new pickup and delivery options to counter the expanding retail ambitions of rival Amazon. Walmart too has invested heavily in areas like grocery delivery and a network of Pickup Towers installed in stores across the country.