Target generated strong comps
Target Corporation (TGT) has reported impressive comparable sales in the past several quarters thanks to the strong growth in its traffic. On average, Target’s traffic has increased ~5% in the past four quarters. The rise in the company’s traffic has been led by the expansion of its digital fulfillment options, including same-day delivery and curbside pickup.
Also, Target’s exclusive merchandise, expanded assortments, store remodelings, and value pricing continue to drive its growth.
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Target’s overall comps have also gained from digital sales and improved performances across its stores, which is encouraging. The company’s efforts to remodel its stores are generating higher sales and productivity.
In comparison, Walmart (WMT) has also impressed with its comps growth rate thanks to its e-commerce platform expansion, fast delivery, and broader assortments. Meanwhile, Costco’s (COST) price investments and expanded assortments make it a favorite destination among consumers, in turn driving its industry-leading comps amid heightened competition from online players.
We expect Target to carry its momentum into fiscal 2019 and report mid-single-digit growth in its comps. The retailer has expanded its doorstep delivery through Shipt to 1,500 stores across 200 markets. Meanwhile, curbside pickup is now available at ~1,000 of its stores. Target plans to remodel 300 stores and continue to open small-format stores in fiscal 2019.
Expansion of digital offerings and a focus on merchandise are expected to drive Target’s online traffic. Meanwhile, store remodelings are expected to support the company’s in-store sales growth rate.