Target CEO: Stimulus checks led Americans to return to stores, shopping across all categories

In the first-quarter, Target posted a beat on both its top and bottom line. The retail giant also saw a spike in digital comparable sales up 141%. Yahoo Finance's Brian Sozzi and Alexis Christoforous speak to Brian Cornell, Target chairman & CEO about the current state of the business and the future outlook of the store, including the importance of safety.

Video Transcript

BRIAN SOZZI: Yeah. So very true. But staying on the retail theme, Target. Target could be among the few retail winners as the sector emerges from a severe downturn thanks to the COVID-19 pandemic. Joining us to discuss his company's path forward is Target Chairman and CEO Brian Cornell. Brian, always good to speak with you. Thanks for taking a few minutes this morning.

BRIAN CORNELL: Brian, good morning.

BRIAN SOZZI: You guys have put up some mind-blowing gains. I don't know any other way to put it. Specifically in April, online sales in April up 282%. What have you seen since April? I think a lot of retailers that we've talked to, they've seen the strength continue into May, in large part because of the stimulus checks. But also, I think consumer confidence has improved a little bit. What have you seen at Target?

BRIAN CORNELL: You know, Brian, we've seen different chapters over the last few months, and I've talked about this a lot. If we go back to February, the early part of February was just a normal shopping period. Our comps were up 3.8% overall. Our digital business grew by a healthy 33%, kind of the start you would have expected.

But as we all started to come to grips with the pandemic, and we saw travel bans put in place, and schools were closing, and sports were stopping, obviously America pivoted and started to stock up for household essentials and food during that late part of February and into March. We saw Americans start to prepare for working from home. I heard you guys talking about it. We were all using our home as our office, were educating our kids at home. And we saw a big surge in electronics and office supplies.

And like most of us, we're having a lot of meals at home, so we saw a big uptick in categories like home and kitchen. But when April 15 hit and those stimulus checks arrived, we saw a very different shopping pattern. America was back in our stores shopping all of our categories, still taking advantage of the convenience of our contact-free online services. But we've really seen a renewed energy in the marketplace with consumers and guests shopping our stores, shopping online, buying all categories. And I think we saw some of that continue into May with a much more normalized pattern of people shopping in our stores each and every day, but certainly a surge in online.

So we're watching it carefully. As many others, we've taken our guidance off the table for now because the marketplace is just too uncertain. But short term, Americans responded to stimulus, and they're back out in stores, and they're also continue to shop online.

ALEXIS CHRISTOFOROUS: Brian, I'm curious what happens now. I know Congress is talking about another stimulus package. Nothing has happened quite yet. Presumably people have spent those stimulus checks. If there are no new checks being issued, what do you expect to happen in terms of that consumer shopping behavior? Do you think that things might take a step or two back?

BRIAN CORNELL: You know, we're spending literally every day trying to really study consumer behavior. Coming out of the pandemic, how's it going to affect how we live, how we work, how we shop, our value system? Obviously, looking at the different economic indicators. So we're really focused on being really flexible, really adaptable. We know that things are going to be difficult to project. But we've got to continue to react to changing consumer needs and lifestyle.

So right now, obviously, we're hopeful that we see a strong economic recovery, that the pandemic is behind us. But we're also worried about that second wave. And we're wondering, do kids go back to school in the fall? What's going to happen with colleges and universities? How do all of us celebrate the holiday season? So just a really unpredictable environment, and we're putting a premium on being really flexible, really adaptable, but most importantly, making sure we're investing in our team and we're creating a safe shopping environment no matter what happens over the next few months or even over the next couple of years.

BRIAN SOZZI: Brian, I've always known you to be thinking 12 steps ahead. So how will shopping at Target look differently this holiday season?

BRIAN CORNELL: Brian, for years, you and I have talked about kind of our internal goal of being America's easiest place to shop. And I think the investments we've made in our stores to create a great in-store shopping environment and make it easier for you to order online and pick up or drive up or have a ship shopper bring things to your doorstep, those are still really important.

But as I sit here today, I think safety is going to be more and more important. And we want to make sure we're coupling being the easiest place to shop in America with being the safest place to shop. So the investments we've made over the last few months, the $500 million we invested in the health and welfare and safety of our team, the investments we've made to make sure when you come into a Target store, you feel safe-- we're going to continue to make those investments in safety. And we're going to put a premium on building trust.

When I look at our results in the first quarter-- and again, who would have ever imagined as you and I were talking in January-- and I would have said, you know, first quarter, expect 10.8% comps, expect digital growth at 141%, no one would have believed that. But I think part of what we saw during the first few months of the pandemic is America putting their trust in Target. And we want to continue to build that trust, no matter what the circumstances are over the next few months and the next few years, to make sure we are one of the most trusted places in America where you can shop.

ALEXIS CHRISTOFOROUS: Brian, I know that you had given store workers a $2.00 an hour raise, and there was talk internally about perhaps making that raise a permanent situation post the pandemic. Have you given that any more thought, and any decisions been made there?

BRIAN CORNELL: Well, we've extended it a couple of times. Originally it was going to end early in May, and then we extended it through the month of May. Now we've said we're going to continue that premium pay investment through July 4.

So when I look at the results we delivered, so much of it was the amazing work that our team did, and the community services we were providing and continue to provide. So we're going to continue to make sure we're investing in our team. We also extended our paid leave program so that anyone who's 65 or older, pregnant, had a preexisting condition has the opportunity to take that leave. We've extended backup care through the July 4 period. So we'll continue to evaluate what's right for our team to make sure that they can continue to service America during this time of crisis.

ALEXIS CHRISTOFOROUS: All right. Go ahead.

BRIAN SOZZI: One more quick one for you, Brian. I know you're concerned about the state of retail. But what does it look like for Target as some of these retailers do go out of business going into the holiday season? Do you gain market share pretty quickly?

BRIAN CORNELL: Well, Brian, I'll start with I remain concerned about the state of retail. We all know, and you're such a great student of the industry. But upwards of 42 million jobs in America are tied to retail. So it's so important that we have a healthy retail environment. And I know so many of our retail peers, they're employees. They shop at Target. So that healthy ecosystem's important for all of us.

But I do expect that we're going to continue to see this bifurcation in retail. And I think there will be the separation between winners and losers, unfortunately. And as hundreds and thousands of doors close, it presents significant market share opportunity for us. I mean, we took significant market share in the first quarter across our entire portfolio.

I expect that's going to continue for years to come. And I think Target, along with a few of our peers, will continue to build market share, continue to build a stronger relationship with American consumers. And we're going to continue to invest to make sure we build that trust and we retain the trust of America as we go forward.

ALEXIS CHRISTOFOROUS: All right. Brian Cornell, Chairman and CEO of Target. Thanks for being with us, and best of luck to you.

BRIAN CORNELL: Thank you. Same to you.