Target Corp. grew online sales 19% during November and December, but total comparable sales increased just 1.4% during that period as retail chains continue to report a lackluster holiday season. The big box store, No. 16 in 2019 Digital Commerce 360 Top 1000, didn’t disclose exact figures for the season.
Same-day fulfillment was the bright spot for the retailer, with in-store pickups, drive-up orders and same-day delivery growing 50% over last year, Target said. On Christmas Eve, drive-up orders increase five-fold compared with the same time last year. Stores fulfilled more than 80% of the online orders for the full 2-month period.
Target made a big bet on toys over the holidays by opening more than two dozen mini-Disney stores inside some of its locations and fulfilling sales made on the relaunched website for Toys R Us Inc. (No. 171); it didn’t pay off. Comparable toy sales were flat, breaking a streak of positive sales that lasted about 5 years. Electronics sales were down more than 6%, the retailer said, as a lack of new and inspiring gadgets depressed consumer demand, while home decor sales also declined.
“There was notable weakness in electronics and parts of home,” Target CEO Brian Cornell said in a blog post accompanying the results. “After two strong holiday seasons in toys, our growth was essentially flat.”
The lackluster report comes on the heels of similarly weak results from department stores like J.C. Penney Co. (No. 40) and Kohl’s Corp. (No. 24), but Target’s falloff is more worrying as it had been one of the industry’s top performers for the past 2 years. In 2019, its shares almost doubled as it consistently blew past analysts’ estimates and boosted its full-year guidance twice. The broader trend could also hurt Walmart Inc. (No. 3). Walmart’s holiday sales “appeared slightly softer” than expectations, analysts at Cleveland Research said last week.
The period was a “tough miss,” Cornell said in the post. “While we knew this season was going be challenging, it was even more challenging than we expected.”
In other earnings news:
- Coming back from a slowdown attributed to new sales tax laws, online wedding ring giant James Allen grew sales 26.9% for the holiday season, helping boost total ecommerce sales at parent Signet Jewelers Ltd. (No. 113) by 13.5% for the 9-week period ending Jan. 4. James Allen, Signet’s largest online brand, generated $64.1 million in revenue, 3.5% of the company’s overall $1.82 billion in sales. That’s compared with $46.9 million in online sales and 2.3% of overall revenue generated during the same period last year.
- Online sales growth at another jewelry giant, Richemont Group (No. 35), increased 7.6% to 747 million euros ($828.7 million) from 694 million euros ($769.9 million) for its third fiscal quarter ended Dec. 31. That’s a major slowdown from the 31% growth reported for the first 6 months of its fiscal year ended Sept. 30. Richemont acquired Yoox Net-a-Porter in 2018 for $3.3 billion to boost its online cache, but also owns prestige brands like Cartier, Montblanc and Panerai. The company blamed the holiday deceleration on increasing competition on pricing and storm damage to a warehouse in Landriano, Italy, that supplies its Mr Porter ecommerce site.
Bloomberg contributed to this reportFavorite