Target to invest up to $5 billion to fuel more growth
NEW YORK – The Associated Press
Target will invest up to $5 billion this year in physical stores, remodels, new brands and expanding its online fulfilment as the discounter continues to drive sales growth and differentiate itself from rivals.
The plans, announced on March 1 at its annual investor meeting held in New York, include opening 30 new stores, from midsize locations in dense suburban areas to small stores in cities like Charleston, South Carolina. It also plans to remodel 200 of its existing stores, reaching more than half of its 1,900 stores this year. The Minneapolis retailer also aims to roll out brand partnerships including opening 250 more Ulta Beauty shops in its stores, with plans to eventually operate 800 shops.
The moves come as Target pushed through headwinds - from congested ports to inflation that’s been the highest in 40 years - to deliver solid results for the three-month period that included the crucial holiday shopping season.
“We continue to see a resilient consumer,” Target CEO Brian Cornell told analysts at the meeting.
Fourth-quarter profit rose nearly 12 percent, while sales increased 9.4 percent, and the Minneapolis retailer released an upbeat revenue outlook for 2022.
Target was one of a handful of retailers that prospered during the depths of the COVID-19 outbreak. As physical stores selling non-essential goods closed temporarily or permanently during the depths of the pandemic, homebound people turned to Target’s online services for everything from groceries to cleaning supplies.
But in recent months, as overall demand has surged, retailers are facing rising costs for everything from labor to shipping as supply chain backups hit companies worldwide. Target, because of its size, was able to charter vessels and fill its shelves ahead of the holiday shipping crunch. But many other big retailers have defied these challenges as well.
Target’s advantage competing against massive rivals can be found in its stores, which have become become the equivalent to Amazon’s “fulfilment centers.” Aisles have been filling with shoppers again as the pandemic wanes and behind the scenes, online orders are taken, goods are packed and shipped or prepared for curbside pickup at Target stores that are critical to satisfying digital sales, which rose 9.2 percent in the quarter.
Digital sales growth reached nearly $13 billion in 2021, and more than 95 percent of Target’s fourth-quarter sales were fulfilled at its stores.
Net income for the quarter that ended Jan. 29 reached $1.54 billion, or $3.21 per share. Revenue was $31 billion compared with Wall Street projections of $31.32 billion.