Target Saves Money on Same-Day Pickup As Sales—and Earnings—Soar To New Heights

Business is booming at Target. On Wednesday, the big-box retailer released its third-quarter report, which noted that digital sales are up more than 30 percent.  And 80 percent of that growth was driven by same-day delivery service, which includes not only home delivery (via Shipt) but also in-store pickup and curbside pickup.

Specifically, net income for the retailer increased 15.5 percent to $706 million in the quarter (which ended November 2).  This is up from $616 million during the same quarter last year. 

Target CEO Brian Cornell notes, “The Target team did an excellent job serving our guests and executing our strategy throughout the third quarter. Our third-quarter results are further proof of the durability of our strategy, as we’re seeing industry-leading strength across multiple metrics, from the top line to the bottom line.”

Analysts and investors have long been concerned about the survival of brick-and-mortar retail in the digital shopping world, as products online sales tend to be less profitable than their in-store counterparts (which often result in impulse and convenience purchases), and they tend to require delivery costs.

Cornell goes on to say, however, that being able to ship from store helps to reduce those additional costs.  When Target fulfills an online order from local store back stock instead of shipping from a regional distribution center it can save the company approximately 40 percent.  Of course, when a customer orders something online but opts to pick it up in store or curbside, it can save the company upwards of 90 percent.

All this in mind, Target has raised its full-year profit outlook with an adjusted earnings per share in the range of $6.25 to $6.45.  This is certainly better than the prior range estimate of $5.90 to $6.20 per share; and still beats analyst estimates of $6.18 per share. 

This has helped Target shares to surge more than 12 percent, midweek, reaching up to an all-time intraday high of $126.06, further contributing to the stock surging more than 67 percent on the year, so far.