Shoppers flocking back to stores boost Target sales, outlook By Reuters

By Aishwarya Venugopal

(Reuters) -U.S. shoppers returning to stores ahead of the back-to-school season helped Target Corp (NYSE:) forecast higher same-store sales growth after beating quarterly estimates on Wednesday, even as online demand sharply dropped from pandemic highs.

Traffic to stores rose about 13% in the second quarter, in sharp contrast from a year ago when customers relied on the company’s speedy delivery services for their pandemic-related shopping needs.

Along with larger rival Walmart (NYSE:)’s results from a day earlier, Target signaled a return to pre-pandemic behavior among U.S. shoppers as vaccinations and eased restrictions encourage more people to step out.

“We believe that America still embraces stores and the traffic we are seeing tell us that stores continue to play an important role,” Target’s Chief Executive Officer Brian Cornell said.

Executives also signaled a “meaningful” change in the online services used by shoppers, with same-day offerings such as in-store pickup and drive up growing 55% in the quarter but home delivery orders declining.

Digital comparable sales rose 10%, against the 195% jump a year earlier and 50% in the first quarter.

Overall, total comparable sales rose by a better-than-expected 8.9% and the retailer projected high single-digit growth in sales for the second half of the year, betting on the strong momentum from back-to-school demand for clothes and stationery.

Target was not seeing any adjustment in consumer behavior so far due to the Delta coronavirus variant, which has caused a surge in infections and raised concerns over the pace of an economic recovery.

“Right now we see a very healthy and resilient consumer, one that is appropriately cautious but continues to be very optimistic and is excited about things like back-to-school and back-to-college,” Cornell said.

Shares of Target, which also announced a new $15 billion share repurchase program, were largely flat in morning trading, having gained about 45% this year.