A person wearing a protective mask walks past a Target Corp store in the Grossmont Center Mall in La Mesa, California, USA on Thursday, February 11, 2021.
Bing Guan | Bloomberg | Getty Images
Target said on Tuesday that it hopes to build on its recent growth by investing around $ 4 billion annually over the next few years to accelerate new stores, improve existing stores and increase its ability to fulfill online orders quickly. .
However, investors and analysts were left without important information: a forecast for the year. The company did not want to give guidance and says Covid-19 makes it difficult to predict consumer spending.
Shares fell nearly 5% early Tuesday, despite Target beating earnings expectations in the fourth quarter.
Target CEO Brian Cornell said on Tuesday at a virtual investor day that the retailer’s recent results are not a pandemic-related blip, but the profit of its long-term business strategy. He pointed to investments and decisions he has made over the past five years, such as the growing collection of private label brands, his partnerships with popular national brands and the use of stores as hubs to execute online orders.
“It’s not a fluke, but it’s proof that we’ve built a business model that works as intended, which puts Target in its own category,” Cornell said.
He told investors that continued uncertainty would not deter the company in the coming months.
‘I recognize the frustration, no longer exactly, especially not when we think of sales, but I can guarantee you that our entire leadership team and that every part of this organization is focused on maintaining and growing market share, regardless of the variables we have to face it, ”Cornell said.
New stores, distribution centers
The next steps of Target will include opening 30 to 40 new stores each year. Some of these stores are close to university campuses and in major cities such as New York, Los Angeles and Portland.
It will add two distribution centers and try faster, technology-enabled ways to recharge shelves. And it will test new hubs that sort packages, give employees time to pick and pack online orders, and help the business design more cost-effective delivery routes.
Michael Fiddelke, chief financial officer, said the retailer would “take offense and lean on the opportunity to build on last year’s momentum.”
Target noticed small competitors during the pandemic. As buyers consolidated travel, they spent more money on fewer places where they found a wide variety of items. As shoppers put safety first, they resorted to contactless approaches such as picking up online purchases in the parking lot. As consumers spent more time at home, they focused more of their dollars on items that helped them work, learn, and relax. The factors favored the large-retailer.
The company’s sales in 2020 grew by more than $ 15 billion – greater than its total sales growth over the previous 11 years. It achieved approximately $ 9 billion in market share in its categories during the financial year.