In the third quarter, comparable sales expanded 12.7%, on top of a nearly 21% increase one year ago.
Since the third quarter of 2019, prior to the pandemic, Q3 store sales have expanded by $3.8 billion, while digital sales have increased another $3.1 billion.
Third quarter sales through these services have expanded by nearly 400% or $2 billion over the last two years.
Through the first three quarters of the year, sales through these services have grown by more than $6 billion since 2019, a number larger than the total sales of many prominent retailers.
We continue to invest in key partnerships that enhance our assortment and experience, including the opening of more than 100 Ulta Beauty shop-in-shops and our recent announcement that we're doubling the number of enhanced Apple experiences in electronics.
On top of the investments in inventory, in-stocks, and value I outlined earlier, we've announced that we're hiring 30,000 new year-round supply chain team members to support our current and expected growth.
In our stores, we're providing our team members with more pay, flexibility, and reliable hours this holiday season, offering more than 5 million additional hours to our existing team, an investment of more than $75 million over the holiday season.
To supplement the additional hours from our existing team, we're hiring another 100,000 seasonal team members throughout the country, many of whom have an opportunity to stay on with Target after the holidays.
As you heard from Brian, third quarter comparable sales grew 12.7%, reflecting double-digit growth in every one of our core merchandising categories.
Hardlines, which comped in the mid-teens on top of mid-30% comps last year, was fueled by incredible momentum in our toys and sporting goods businesses, which both saw a comp growth north of 20%.
Electronics delivered low single-digit comp growth on top of last year's comp of nearly 60%.
Whether it's preparing a delicious meal, throwing a festive family party, or hosting a game night with friends, from Good & Gather cheese board starter kits and favorite day-baked goods, to Threshold fall collections, including festive baking dishes, serving platters in the color of the season, and an array of plates, linens, and other table-toppers, all $15 and under.
We'll highlight Black-owned businesses and beauty, hardlines, food and beverage, and home, including McBride Sisters wine pairings, BIPOC Authors in our $10 book assortment, and a limited-time Black artist partnership in wrapping paper.
So, it's no surprise we're building on this momentum in time for the holiday season.
And on the subject of Ulta Beauty at Target, our guests are telling us it's clearly hitting the bullseye, with makeup, skincare, bath and body, hair care, and fragrance for more than 50 top brands now available at Ulta Beauty at Target, both in-stores and online.
With nearly 300 must-haves for the family, pets, and home, and most of the colorful brick-inspired items under $30, our guests are sure to find something everyone would love on any budget.
In our stores, which fulfill more than 95% of our total sales, the team focuses on delivering a great guest experience across hundreds of millions of guest transactions every quarter.
Specifically, at the end of the third quarter, inventory on the balance sheet was more than $2 billion higher than last year, representing growth of about 18% from a year ago.
Looking back to the pre-COVID period, our Q3 ending inventory has grown more than $3.5 billion since the end of Q3 2019, representing 31% growth over a two-year period.
Also, new this year, we've rolled out a new point-of-sale system across more than 90% of our stores, providing more speed, efficiency, and enhanced experience at both the checkout and our service counter.
These efforts include capital projects to add permanent storage capacity in more than 200 high-volume stores, investing in flexible fixtures to provide temporary storage areas to support seasonal peak, adding thousands of new items to the list available for pickup and Drive Up, doubling the number of Drive Up parking stalls compared with last year, and designating stall numbers to help our teams deliver Drive Up orders more efficiently.
Turning to the work of the properties team, we expect to finish about 145 remodels in 2021, having completed more than 40 remodels prior to the end of Q3 with more than 100 additional projects slated to wrap up before the holiday.
The team also opened another 15 new stores in the third quarter, bringing the year-to-date total up to 30.
Among those projects, we've opened new stores ranging from 11,000 to 160,000 square feet, which demonstrates the flexibility we've developed to design the optimal store size for an individual neighborhood based on their local needs and available real estate in the market.
In support of those growing needs, we recently announced that we're adding more than 30,000 permanent positions across our supply chain network to support the growth we expect to continue delivering in the fourth quarter and beyond.
For the entire fiscal year in 2018, our business generates $74 billion in sales.
Less than three years later, our business had already delivered $74 billion in sales through the third quarter, with the biggest quarter of the year still ahead of us.
When I first started working here in 1996, Target delivered just under $18 billion in revenue for what was then called Dayton Hudson Corporation.
While many things have changed since then, both in retail and at this company, we successfully maintain what's made Target's successful and unique for nearly 60 years.
As Brian mentioned, our 12.7% comp in the third quarter came on top of a nearly 21% increase a year ago.
As a result, our August comp was our strongest of the quarter, our September comp dipped down to about 10%, and we accelerated back into the low-teens in October.
Among the component drivers of our sales, growth continues to be driven by traffic, even as we retain nearly all of the basket growth that happened a year ago.
Specifically, third quarter traffic increased 12.9% on top of a 4.5% increase last year.
While average ticket declined only slightly, about 20 basis points, after growing more than 15% a year ago.
Among our sales channels, stores comparable sales grew 9.7% in the quarter on top of 9.9% last year, while digital comp sales grew 29% on top of 155% growth a year ago.
Within our digital fulfillment, sales on orders shipped to home increased slightly over last year, while same-day services grew about 60% on top of a more than 200% increase a year ago.
Among those same-day options, both in-store pickup and Shipt grew more than 30% in the quarter, while Drive Up grew more than 80% on top of more than 500% a year ago.
Put another way, since 2019, sales through Drive Up have expanded more than 10 times for about $1.4 billion in the third quarter alone.
Moving down the P&L, our third quarter gross margin rate of 28% was 2.6 percentage points lower than a year ago.
Among the drivers, core merchandising accounted for 2 percentage points, or more than three quarters of the rate decline, driven primarily by incremental freight and other inventory costs.
Among the other gross margin drivers, payroll growth in our supply chain accounted for about 70 basis points of pressure, while category sales mix contributed about 10 basis points of benefit.
On the SG&A expense line, we saw about 160 basis points of improvement in the third quarter, reflecting disciplined cost management combined with the leverage benefit of unexpectedly strong sales.
On the D&A line, we saw about 20 basis points of rate improvement as sales growth more than offset the impact of higher accelerated depreciation, which reflects the continued ramp-up in our remodel program.
Altogether, our third quarter operating margin rate of 7.8% was about 70 basis points lower than a year ago but more than 2 percentage points higher than two years ago.
On a dollar basis, operating income was 3.9% higher than a year ago and double the number recorded in the third quarter of 2019.
Moving to the bottom of the P&L, our third quarter GAAP earnings per share of $3.04 was 52% higher than last year when we recorded more than $500 million of interest expense on early debt retirement.
On the adjusted earnings per share line, where we excluded early debt retirement expense, we earned $3.03 in the quarter, representing an 8.7% increase from a year ago.
Compared with two years ago, both GAAP and adjusted earnings per share have increased more than 120%.
Next, we support the dividend and look to build on our long history of annual increases, which we've maintained every year since 1971.
On the capex line, we'd invested $2.5 billion through the first three quarters of 2021 and expect to reach about $3.3 billion for the full year.
As of today, we continue to believe these investments will amount to capex in the $4 billion to $5 billion range in 2022, and we'll continue to refine our view in the months ahead.
Turning now to dividends, we paid $440 million in dividends in the third quarter, up $100 million from last year.
This increase reflects a 32% increase in the per-share dividend, partially offset by a decline in share count.
In the third quarter, we deployed $2.2 billion to repurchase 8.8 million of our shares, bringing our year-to-date total up to $4.9 billion.
For the trailing 12 months through the end of Q3, our business generated an after-tax ROIC of 31.3% compared with 19.9% a year ago.
In terms of profitability, we continue to expect that our business will deliver a full year operating margin rate of 8% or higher, up significantly from 7% in 2020.

Summary:
In the third quarter, comparable sales expanded 12.7%, on top of a nearly 21% increase one year ago.
So, it's no surprise we're building on this momentum in time for the holiday season.
Among the component drivers of our sales, growth continues to be driven by traffic, even as we retain nearly all of the basket growth that happened a year ago.
Among our sales channels, stores comparable sales grew 9.7% in the quarter on top of 9.9% last year, while digital comp sales grew 29% on top of 155% growth a year ago.
On a dollar basis, operating income was 3.9% higher than a year ago and double the number recorded in the third quarter of 2019.
On the adjusted earnings per share line, where we excluded early debt retirement expense, we earned $3.03 in the quarter, representing an 8.7% increase from a year ago.
In terms of profitability, we continue to expect that our business will deliver a full year operating margin rate of 8% or higher, up significantly from 7% in 2020.