Digital sales growth helps propel Target, Kohl's to strong Q4 results

The brick-and-mortar retail space has yet to fully recover from pandemic-related declines, but retailers continue to see massive gains in digital sales as consumer spending shifts online.

The brick-and-mortar retail space has yet to fully recover from pandemic-related declines, but retailers continue to see massive gains in digital sales as consumer spending shifts online. On Tuesday, retailers Target and Kohl's reported strong fourth quarter financial results driven largely by e-commerce revenue. 

Target, which has enjoyed stellar digital same store sales throughout the pandemic, said its fourth quarter digital comparable sales increased by 118% year over year, accounting for two-thirds of the retailer's overall comp growth. The retailer's digital gains reflect the shift in consumer shopping habits in the COVID-19 era, with fewer people going into stores and opting for online purchases instead. 

Sales through Target's curbside pickup service Drive Up increased 500% compared to the same quarter a year ago, while sales fulfilled by its online delivery service Shipt shot up more than 300% year-over-year. Overall, sales through same-day services grew by 212% in the quarter.

Target chief executive Brian Cornell said the company saw record growth in 2020 and gained $9 billion in market share. The company's 2020 revenue increased by $15 billion -- more than the 11 prior years combined.

"As we look ahead to 2021 and beyond, we see continued opportunity to invest in our business and our team, building on the strong foundation we've established to drive market share gains and deliver profitable growth for years to come," said Cornell.

Target did not issue Q1 guidance, citing pandemic uncertainty. But as for the rest of the numbers, the company reported adjust earnings of $2.67 per share on revenue of $28.34 billion. Wall Street was expecting earnings of $2.54 per share with revenue of $27.48 billion.

Kohl's hasn't had quite as much revenue success as Target throughout the pandemic, as the company opted to close many of its retail locations for a chunk of 2020. Nonetheless, the company's online sales are once again showing strength. In the fourth quarter, the retailer said online sales grew of 22% from a year earlier and accounted for 42% of its total sales.

"After an extraordinary year managing through the pandemic, we ended the year in a very solid financial position, and we enter 2021 with strong momentum," CEO Michelle Gass said in a statement.

For Q4, Kohl's reported earnings per share: $2.22 on revenue of $5.88 billion. Analysts expected EPS of $1.01 and $5.86 billion in revenue.

Kohl's said it now expects full year 2021 net sales to increase in the "mid-teens percentage range" compared to the previous year, with operating margin in the range of 4.5% to 5%, and earnings per share in the range of $2.45 to $2.95, excluding any non-recurring charges.