Target CEO Brian Cornell says retailer is benefiting from its ‘one-stop solution’ advantage

Written By Benjamin Angel

KEY POINTS

  • On CNBC’s “Squawk Box” Wednesday, Target CEO Brian Cornell said its many merchandise categories and brands have caught the eye of customers and fueled its third-quarter earnings.

  • Its diverse merchandise, from groceries to apparel, has taken on additional importance as shoppers limit trips during the coronavirus pandemic, Cornell said.

  • “We’re seeing many families coming to us to pick up a new Barbie or something for their kids — a Lego item,” he said. “But while they’re there, they’re shopping for Microsoft items or Apple.”

Target CEO Brian Cornell said customers may come to its store with a short shopping list or a particular item in mind, but they’re filling up their baskets and leaving with many purchases.

“We’re seeing a guest who’s shopping all of our categories, taking advantage of our one-stop solution,” Cornell said in an interview on CNBC’s “Squawk Box” Wednesday. Earlier, the retailer reported third-quarter earnings that solidly outpaced analyts’ estimates.

Target’s diverse assortment has taken on additional importance as shoppers limit trips during the coronavirus pandemic, Cornell said.

“We’re seeing many families coming to us to pick up a new Barbie or something for their kids — a Lego item,” he said. “But while they’re there, they’re shopping for Microsoft items or Apple. Even during the pandemic, children are outgrowing their clothes, so guests are coming to us for Cat & Jack, but while they’re there they’ve discovered that we have Levi’s Red Tab available for them and their families. They’re also visiting food and beverage and discovering our Good & Gather brand.”

In the third quarter, Target said sales online and at stores open at least a year rose 20.7% from a year earlier. Comparable digital sales grew by 155%, while same-store store sales climbed 9.9%.

Target has seen that shoppers are visiting more frequently and putting more in their baskets. Combined transactions in Target stores and on its website were up 4.5% year over year, while the average ticket grew 15.6% in the quarter.

So far this year, the company said it’s picked up $6 billion in market share, with $1 billion in share gains coming during the latest quarter.

Cornell would not name retailers that it’s taking market share from, but pointed to the company’s numbers saying they “compare very favorably to our peers.”

“It has been broad based,” he said. “We’re picking up share from our traditional competitors as well as specialty competitors.”

And, he said, Target’s recent deal with Ulta Beauty will entice customers to visit its stores and website more and spend more when they do. Next year, a smaller version of Ulta will open in over 100 Target stores with a curated mix of beauty items, from lip glosses to perfume. The beauty items will also be available online.

He said beauty “is a great category that combines style and frequency in our business.”

He added, “it’s just another way for us to elevate the experience and bring an iconic new partner into our Target stores and Target.com.”

Benjamin Angel
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