Today Target highlighted the strategic importance of private brand in its fourth-quarter and full-year 2020 results. The retailer reported an increase of $15.3 billion in annual sales, a 19.8% jump in full-year sales to $92.4 billion.
In private brands, Christina Hennington, Target’s chief growth officer, said the Target private brand portfolio represents a third of its sales. Cat & Jack, Good & Gather, Threshold, and Up & Up each account for $2 billion in sales with an additional ten brands that earn $1billion in sales.
“Own brands is vital to the success of our business,” she said, adding that they’re not just private brands, but brands Target guests trust and love.
“Following years of investment to build a durable, scalable, and sustainable business model, we saw record growth in 2020, as our guests turned to Target to safely provide for their families throughout the pandemic,” said Brian Cornell, chairman, and chief executive officer of Target Corporation. “With the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020, and grew our revenue by $15 billion, which is 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.”
Fiscal 2021 Guidance
In the first quarter of 2020, the retailer withdrew its guidance, in light of the highly fluid and uncertain outlook for consumer shopping patterns and the impact of COVID-19. In the face of continued uncertainty, the company is not providing sales and EPS guidance for Fiscal 2021 and beyond.
The retailer’s total comparable sales grew 20.5% in the fourth quarter, reflecting comparable stores sales growth of 6.9% and digital sales growth of 118%. Total revenue of $28.3 billion grew 21.1% compared with last year, driven by sales growth of 21.0% and a 28.7% increase in other revenue. Operating income was $1.8 billion in the fourth quarter of 2020, up 53.2% from $1.2 billion in 2019.
The fourth-quarter operating income margin rate was 6.5% in 2020 compared with 5.1% in 2019. The fourth-quarter gross margin rate was 26.8%, compared with 26.3% in 2019, reflecting the benefit of merchandising actions, most notably the unusually low markdown rates, partially offset by the impact of higher digital fulfillment and supply chain costs, along with the impact of category mix. THE fourth-quarter SG&A expense rate was 19.2% in 2020, in line with 19.3% in 2019, as investments in safety and team member pay and benefits were offset by leverage resulting from strong revenue growth.
Full-year sales increased 19.8% to $92.4 billion from $77.1 billion last year, reflecting a 19.3% increase in comparable sales combined with sales from non-mature stores. Full-year revenue of $93.6 billion grew 19.8% compared with 2019, reflecting sales growth of 19.8% and an 18.2% increase in other revenue.
Full-year operating income was $6.5 billion in 2020, an increase of 40.4% from $4.7 billion last year. The full-year gross margin rate was 28.4%, compared with 28.9% in 2019. This rate decline reflects unfavorable category sales mix and higher supply chain and fulfillment costs from channel mix, partially offset by markdown favorability. The full-year SG&A expense rate was 19.9% in 2020, compared with 20.8% in 2019, reflecting significant leverage on fixed costs that offset investments in team member pay, benefits, and safety.