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Target's nascent delivery service and small-format stores have produced results "nothing short of astounding," CNBC's Jim Cramer said.
The "Mad Money" host applauded CEO Brian Cornell and Target leadership after the company's fiscal first-quarter report, released Wednesday morning.
Same-store sales grew 4.8% and digital sales surged 42% during the three-month period ended May 4. Target was able to boost traffic during a time when many retailers blamed unfavorable weather for weaker sales, Cramer said.
The retail giant's investments in both same-day distribution and smaller store sizes are showing signs of success.
Last year Target acquired personal shopping and delivery service Shipt for $550 million. Customers can order and receive their items within hours from 1,500 locations across 250 markets, Cramer said. Curbside pickup is also available at 1,250 shops.
Half of Target's online sales during the quarter were through same-day channels — both Shipt delivery or curbside pickup, the host said. That's up from 28% during the same period the year prior.
"Shipt is a subscription service that costs $99 a year. You know, it's a lot like Amazon Prime, but you know what I could argue it's cheaper and better," Cramer said. "Target's gutsy decision to make its stores the centerpiece of the fulfillment system — a lot of people questioned that one — brilliant move."
Target also began scaling its small-store model in 2018 to reach customers in urban regions and draw young shoppers into its buildings. The big-box chain has plans to open 130 of these brick-and-mortar establishments — usually about 40,000 square feet compared to its traditional 100,000-plus-square-foot stores — by the end of 2019.
The move has made Target "fun" to visit, Cramer said.
"Whenever I go somewhere new, I always hope I'll run into a Target, especially that small-format one," he said.
Amazon Go's cashierless store model is "a terrific novelty, quite intimidating by the way, but I much prefer going into the Targets to see what they have that I might not be looking for."
On the company's Wednesday morning earnings call, CEO Cornell told shareholders the company made "bold changes" in past years that "explicitly focused on taking a different path than our competition," as most retailers downsize their footprints.
He later told analysts that "you're seeing the emergence of winners who have been investing in their business, that are adapting to this new omni-channel environment."
Cramer said it's no surprise that the stock surged 7.78% during the session.
Target estimates fiscal second-quarter comparable sales growth will land in the low- to mid-single digit range. The company is projecting adjusted earnings per share in the range of $1.52 to $1.72. The company projects full-year EPS between $5.75 and $6.05.