A person wearing a face mask passes a Target Corp. store. from Grossmont Center Mall in La Mesa, California, USA, Thursday, February 11, 2021.
Bing Guan | Bloomberg | Getty Images
Target said on Tuesday that it hopes to build on its recent growth by investing about $ 4 billion annually over the next few years to accelerate new stores, reshape existing ones and increase its ability to quickly fulfill online orders.
However, investors and analysts were left without essential information: a outlook for that year. The company declined to provide guidance, saying Covid-19 makes it difficult to predict consumer spending.
Shares fell nearly 5% early Tuesday, despite Target exceeding fourth-quarter earnings expectations.
In a virtual investor day on Tuesday, Target CEO Brian Cornell claimed that the retailer’s recent results are not a pandemic blip, but the result of his long-term business strategy. He pointed to the investments and decisions he has made over the past five years, such as his growing collection of private labels, his partnerships with popular national brands, and the use of his stores as hubs to fulfill online orders.
“Far from being a coincidence, this performance is further proof that we have built a business model that works as intended, one that puts Target in its own category,” Cornell said.
He told investors that continued uncertainty will not distract the company in the coming months.
“I recognize the frustration, not being more precise, especially on the top line as we think about sales, but I can guarantee you our entire management team and every part of this organization is focused on maintaining and increasing market share, no matter what we face variables, “Cornell said.
New stores, distribution centers
The next steps of the target will include opening 30-40 new stores each year. Some of these stores will be near university campuses and in major cities such as New York, Los Angeles and Portland.
It will add two distribution centers and try faster, technology-compatible ways to replace shelves. And it will test new hub-sorting hubs, giving employees time to choose and package online orders and help the company design more cost-effective delivery routes.
With the moves, chief financial officer Michael Fiddelke said the retailer would “play offensively and rely on the opportunity to take advantage of last year’s momentum.”
The target was noted by retail rivals during the pandemic. As buyers consolidated their travels, they spent more money in fewer places where they found a wide range of items. As shoppers prioritized safety, they gravitated toward contactless approaches, such as picking up online purchases in the parking lot. As consumers spent more time at home, they directed more of their dollars to items that helped them work, learn, and relax. These factors have benefited the retailer.
The company’s sales in 2020 have grown by more than $ 15 billion – higher than the total increase in sales in the last 11 years. It gained market share of about $ 9 billion by category during the fiscal year.