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Here's Why Target Scored Decent Numbers for the Holiday Season

Zacks Equity Research

The Retail-Discount Stores industry’s prospects are closely tied with the purchasing power of consumers. Certainly, a buoyant consumer environment, courtesy of a robust job market and higher disposable income, worked in favor of the industry participants during the holiday season. These attributes as well as strategic endeavors aided Target Corporation TGT to deliver decent comparable sales numbers for the November/December period.

This Minneapolis-based retailer registered a jump of 5.7% in comparable sales during the festive season compared with 3.4% growth recorded in the year-ago period. Markedly, comps grew across all five key merchandise categories, with Toys, Baby and Seasonal Gift products witnessing exceptional growth. Management expects fourth-quarter fiscal 2018 comparable sales to increase approximately 5%.

Certainly, Target has been gaining from its strategic initiatives to enhance omni-channel capacities, come up with new brands, remodel or refurbish stores, and expand same-day delivery options. In a month, shares of this Zacks Rank #3 (Hold) company have increased 10.4%, outperforming the industry’s growth of 8.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Earlier, Target teamed up with popular online grocery delivery service Instacart to capture the booming online grocery delivery market. Further, the company made significant headway in the same-day delivery race by acquiring Internet-based grocery delivery service Shipt to provide same-day delivery of more than 55,000 groceries, essentials, home, electronics, toys and other products.

The company has rolled out Target Restock program that enables customers to restock their shipping box with essential items online and get them delivered at door step by the next business day for a nominal charge. Target also acquired a transportation technology company — Grand Junction — to expand its supply chain and improve delivery capabilities.

Drive Up, an app-based service, is another initiative to facilitate the shopping process. The service allows customers to place orders using the Target app and have them delivered to their cars. Notably, Store Pickup plus Drive Up soared more than 60% year over year, and formed nearly 25% of Target’s digital sales during the reported period.

Apart from Target, there are other retailers who released their holiday sales numbers.

Here Are 3 Retailers That Had a Successful Holiday Feat

Per a report from Mastercard SpendingPulse, retail sales from Nov 1 through Dec 24 increased 5.1% to more than $850 billion. Retailers like Five Below FIVE, American Eagle Outfitters AEO and Ollie's Bargain Outlet Holdings OLLI witnessed decent holiday performance. Notably, these companies reported comparable sales growth of 4.9%, 6% and 7.1%, respectively.

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