Target to invest up to $5 billion to fuel more growth

Mar 1, 2022, 4:33 AM | Updated: 10:07 pm

NEW YORK (AP) — 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 Tuesday 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%, while sales increased 9.4%, 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 earnings report followed strong fourth-quarter results from Walmart as well as major home improvement chains Home Depot and Lowe’s in the past two weeks. Both Kohl’s and Nordstrom also reported solid results on Tuesday. Kohl’s announced fiscal fourth-quarter profits that beat analysts’ expectations but revenue fell short of estimates, according to analysts polled by FactSet. But Kohl’s delivered an annual profit outlook that was above analysts’ estimates. Nordstrom reported both profits and sales that were above Wall Street expectations and also offered an upbeat annual profit outlook.

Target was not unscathed and cost pressures from 2021 are carrying over into this year.

Gross margins fell from 26.8% during the fourth quarter of 2020 to 25.7% in the most recent quarter. And Target said Tuesday that margins in the first quarter will be lower than last year.

That did not faze investors who drove Target’s shares up nearly 10%, or $19.66, to close Tuesday at $219.43.

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% in the quarter.

Digital sales growth reached nearly $13 billion in 2021, and more than 95% of Target’s fourth-quarter sales were fulfilled at its stores.

The company is also adding “sortation” centers beyond Minneapolis, with five more facilities operating across Dallas, Houston, and Austin, Texas as well as Atlanta and Philadelphia by spring. Another is planned to open later this year. Sortation centers organize online orders packed by local stores for fast neighborhood deliveries.

“We’re getting more efficient, more productive — and that’s flowing through to the bottom line,” Cornell said on CNBC.

Net income for the quarter that ended Jan. 29 reached $1.54 billion, or $3.21 per share. Adjusted earnings per share for the latest quarter was $3.19, easily topping the $2.85 that industry analysts were looking for, according to FactSet. It also topped last year’s fourth-quarter profit of $1.38 billion, or $2.73 per share.

Revenue was $31 billion compared with Wall Street projections of $31.32 billion.

The company registered an 8.9% increase in sales at stores opened at least a year.

Target expects low- to mid-single digit revenue growth for the current fiscal year.

That comes as the retailer Target aims to recruit and hold on its workers with higher pay. The company said Monday that it will offer minimum wages that range from $15 to $24 an hour, with the highest pay going to hires in the most competitive markets. It currently pays a universal starting wage of $15 an hour.

The company has done well with its partnerships with such brands as Levi’s and Disney. Last year, it began rolling out Ulta Beauty shops in its stores as part of a deal with the beauty retailer. Target executives said the Ulta shops have twice the productivity compared with the rest of the store.


Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Republican presidential candidates, from left, former Arkansas Gov. Asa Hutchinson, former New Jers...

Associated Press

3rd Republican presidential debate is set for Nov. 8 in Miami, with the strictest qualifications yet

The third Republican presidential debate will be held in Miami on Nov. 8, a day after several states hold off-year elections.

2 days ago

During the equinox, the Earth’s axis and its orbit line up so that both hemispheres get an equal ...

Associated Press

The fall equinox is here. What does that mean?

The equinox arrives on Saturday, marking the start of the fall season for the Northern Hemisphere. But what does that actually mean?

2 days ago

Ray Epps Ray Epps, an Arizona man who became the center of a conspiracy theory about Jan. 6, 2021, ...

Associated Press

Ray Epps, an Arizona man who supported Trump, pleads guilty to Capital riot charge

Ray Epps, the target of a conspiracy theory about the Jan. 6, 2021, attack, pleaded guilty on Wednesday to a misdemeanor charge.

5 days ago

Former President Donald Trump repeatedly declined in an interview aired Sunday, Sept. 17, 2023, to ...

Associated Press

Trump refuses to say in a TV interview how he watched the Jan. 6 attack unfold at the US Capitol

Former President Donald Trump repeatedly declined in an interview aired Sunday to answer questions about whether he watched the Capitol riot.

8 days ago

This frame grab from video, provided by the Mexican government, shows Ovidio Guzman Lopez being det...

Associated Press

Mexico extradites son of ‘El Chapo,’ Ovidio Guzman Lopez to US

The son of notorious cartel leader Joaquin “El Chapo” Guzmán, Ovidio Guzman Lopez was extradited to the U.S. on Friday.

8 days ago

impeachments in US history...

Associated Press

A look at notable impeachments in US history, including Texas Attorney General Ken Paxton

Texas Attorney General Ken Paxton was acquitted Saturday on during his impeachment trial. Here's a roundup of impeachments in U.S. history.

9 days ago

Sponsored Articles



At Ability360, every day is Independence Day

With 100 different programs and services, more than 1,500 non-medically based home care staff, a world-renowned Sports & Fitness Center and over 15,000 people with disabilities served annually, across all ages and demographics, Ability360 is a nationwide leader in the disability community.


OCD & Anxiety Treatment Center

5 mental health myths you didn’t know were made up

Helping individuals understand mental health diagnoses like obsessive compulsive spectrum disorder or generalized anxiety disorder isn’t always an easy undertaking. After all, our society tends to spread misconceptions about mental health like wildfire. This is why being mindful about how we talk about mental health is so important. We can either perpetuate misinformation about already […]



Thank you to Al McCoy for 51 years as voice of the Phoenix Suns

Sanderson Ford wants to share its thanks to Al McCoy for the impact he made in the Valley for more than a half-decade.

Target to invest up to $5 billion to fuel more growth