Coronavirus boosts Target's sales of essential goods as panicked shoppers stock up
'It's a very unique environment that none of us have seen before,” said CEO Brian Cornell
Target Corp said on Wednesday it saw a more than 50% rise in same-store sales so far in March for certain essential goods, joining a list of grocery chains benefiting from consumers hunkering down for an extended period due to the coronavirus outbreak.
“It’s a very unique environment that none of us have seen before,” Target Chief Executive Officer Brian Cornell said on Wednesday, adding that it had been difficult to keep shelves stocked with some essential items when demand soared.
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Similar scenes were seen in the United Kingdom, where consumers have stripped shelves bare of canned food, disinfectants, toilet paper and other essentials with the country going into lockdown.
UK’s biggest retailer Tesco said the coronavirus-led panic buying has put the company in “uncharted waters,” while Ocado, UK’s top online grocer, said on Tuesday orders currently were 10 times normal rates. The biggest global names are cautious in admitting it, but after a decade of an e-commerce induced “retail apocalypse”, the coronavirus outbreak is providing the relief that big-box supermarket operators have been hoping for.
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Analysts pointed to Walmart and Target as two chains that will benefit more than others in the United States due to their robust supply chains and higher investments in online and delivery.
Customers rush to purchase toilet paper at a Target store during the panic shopping. (Credit: Paul Hennessy / Echoes Wire/Barcroft Media via Getty Images)
“Walmart and Target’s curbside pick up and delivery capabilities will resonate strongly with consumers in this time of social distancing, and should contribute comparable sales growth,” Cowen analyst Oliver Chen said in a note early this month.
The virus, which has infected more than 44,000 people in the United States leading to more than 500 deaths, has resulted in the closure of several businesses and raised concerns of a global recession.
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Target said on Wednesday it would focus on meeting this surging demand by cutting down on remodeling stores and opening fewer small format outlets.
The company also withdrew its full-year outlook that it had announced just three weeks earlier, and suspended its $5 billion share buyback program.
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Shares of Target fell as much as 8.7% to $91.80. They have fallen nearly 22% this year.
Target CEO Cornell said demand has been “unprecedented,” likening the buying behavior to levels occasionally seen during natural disasters.
“There is no playbook for how to react in this environment. We’re writing the script each and every day,” Cornell said.