Retail

Target CEO credits canceled vacations, not stimulus checks, for blowout quarter

Key Points
  • Target CEO Brian Cornell said the retailer attracted consumers' dollars because they couldn't go on vacation or spend money on typical summer activities during the pandemic.
  • "We're not on planes. We're not spending dollars on lodging, so many of those dollars have been redirected into retail," he told CNBC.
  • Some of the retailer's competitors that sell home decor and apparel were forced to shut during the pandemic, but Target could keep stores open as an essential retailer.
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Target CEO Brian Cornell on what drove the blowout second quarter results

Target CEO Brian Cornell said Wednesday he would like to see Congress strike a stimulus deal, but he credited closed movie theaters and canceled summer vacations for fueling the retailer's blowout quarter.

The coronavirus lockdowns across the U.S. that forced consumers inside also sent them to its store and website to shop, Cornell said on CNBC's "Squawk Box." Some discovered Target's e-commerce services, such as curbside pickup, or home delivery service Shipt — which were ready to go during the pandemic because of the retailer's investments over the years, he said.

"In the pandemic, we're not going to restaurants, we're not going to movies," he said. "Those traditional summer trips have been canceled. We're not on planes. We're not spending dollars on lodging, so many of those dollars have been redirected into retail."

Target posted eye-popping numbers Wednesday as it reported its fiscal second quarter. Target's sales online and at stores open for at least a year climbed by 24.3% during the quarter ended Aug. 1 — an all-time high for the retailer.

On Tuesday, big-box competitor Walmart said it got a bounce from stimulus checks in its fiscal second quarter. It said spending tapered off in July as shoppers had spent that money. 

Cornell said Target attracted new customers and gained market share — especially with its online offerings. It attracted 10 million new digital customers and $5 billion in market share in the first half of the year. Some its competitors that sell home decor and apparel were forced to shut during the pandemic, but Target could keep stores open as an essential retailer.

Cornell did, however, encourage lawmakers' approval of additional aid for consumers.

"It's very important the House and Senate come together and put forward a new stimulus plan," he said.

The stimulus bill would help give consumers and businesses a little more certainty in a difficult time, he said.

"There's just so much uncertainty today — what's going to happen with the pandemic, what's happening with flu season — as we go into the fall, questions about the economy and the new stimulus, do we go back to school and back to college," he said. "So we better make sure we're adjusting to this environment and adjusting each and every week. ... It's hard to understand what's going to happen next week, let alone three or four months from now."