Target Finally Gets Traction But Still Behind Kmart
Kmart and Target have posted increased revenue and profits in the second half of 2020, with Target sales going up even as stores are shuttered or converted to Kmart outlets.
Revenue was up 5.7 per cent to $5.1 billion across both Kmart and Target for the six months to 31 December 2020, translating to EBITDA of $822 million.
Total sales at Kmart were up 7.1 per cent, with a 2.3 per cent increase for Target, despite restrictions on customer numbers due to COVID.
Rob Scott, managing director of Wesfarmers, hailed the positive result for both brands.
“Good progress to accelerate the growth of Kmart and address the performance in Target continued during the half and, on a combined basis, Kmart and Target delivered a record earnings result for the period.
“Sales and transaction volume uplifts from Target stores that have been converted to Kmart stores continue to be very encouraging, and 19 stores were converted during the half. Target’s profitability improved significantly, supported by strong demand and the ongoing simplification of the business,” he said.
Scott also noted a boost for Target, despite its recent troubles which saw 12 large-format Target stores converted to Kmart outlets, and seven Target Country stores to small-format K Hub stores, over the six month period.
“Target’s profitability improved significantly in the half, reflecting strong sales growth, a higher proportion of full-price sales and lower operating costs, which was underpinned by the ongoing simplification of the business.
“In line with the previously announced strategy, Target has prioritised online growth and focused on improving the product offer in destination categories of apparel and soft home.
Other than the 19 Target conversions, Kmart opened up two new stores over the half, while Target shut down 25 including converted stores. Between them, Kmart and Target ended the year with 514 locations.