Target to Invest $5B to Drive Even More Growth
Target is planning to invest up to $5 billion in its physical stores, digital experiences, fulfillment capabilities and supply chain capacity in 2022 to keep driving growth after another impressive year of sales.
The retailer made the announcement on the same day that it reported stellar earnings for the fourth quarter and full year ended Jan. 30.
"Our strong fourth-quarter performance capped off a year of record growth in 2021, reinforcing the durability of our business model and our confidence in long-term profitable growth,” said Brian Cornell, chairman and CEO of Target. “As we look ahead, we’ll keep investing and delivering on all that has earned the loyalty and trust of our guests; that starts with our outstanding team and includes continued differentiation through affordability, assortment, ease and convenience.”
For the fourth quarter, same-store sales increased 8.9% at Target. Digital sales increased 9.2%. Total revenue of $31 billion grew 9.4% compared with last year, driven by sales growth of 9.4% and an 11.1% increase in other revenue. Net income increased 11.9% to more than $1.5 billion and EPS increased 17.8% to $3.21.
For the full year, Target’s revenue hit $106 billion, compared with $77.1 billion for the year ended Feb. 1, 2020. Full-year operating income was $8.9 billion in 2021, an increase of 36.8% from $6.5 billion last year.
In 2022, Target plans to open approximately 30 stores. The stores will range in footprint from mid-size locations in dense suburban areas to small-format stores in city centers such as Charleston, S.C., and New York’s Times Square.
In addition to new stores, Target will build on the company’s remodel program with 200 top-to-bottom renovations of its existing fleet, reaching more than half the chain since beginning this effort in 2017. These investments add inspiration to the store environment through modern design elements like brighter lighting and elevated merchandise displays, while also equipping the team with enhanced hold space and pickup areas for online fulfillment. On top of the full-store remodels, Target will complete hundreds of smaller projects across the chain to support the growth of its fulfillment services and expanding in-store brand partnerships.
Technology enhancements in 2022 will also enable shoppers to purchase Supplemental Nutrition Assistance Program (SNAP)-eligible grocery items on Target.com, building on the SNAP payment capabilities in stores. With this functionality, customers can shop for SNAP-eligible items online and choose Target’s free, same-day services Drive Up and Order Pickup, adding ease and convenience to the shopping experience.
Since 2019, Target’s same-day fulfillment services have grown nearly 400%, accounting for more than half of the company’s $13 billion digital growth. These services drive strong customer engagement and offer easy and convenient shopping options. This year, Target will continue enhancing its same-day offering by adding Starbucks orders and easy returns to its popular Drive Up service in select stores ahead of the holiday season, and expanding its back-up item option for pickup orders to more categories.
To add speed, efficiency and capacity to its fulfillment operation, Target continues to invest in sortation centers, which organize digital orders packed by local stores for fast neighborhood deliveries. The company is expanding this model beyond Minneapolis, with five more facilities operating across Dallas, Houston, Austin, Atlanta and Philadelphia by spring and another five planned to open later this year. Sortation centers enable a next-day shipping capability in dense markets and allow the company to further scale its stores-as-hubs strategy.
Target also opened two new distribution facilities in 2021 to support the increased inventory flow to its stores. The company has another four facilities currently in development to expand supply chain capacity, with plans for several more in the next few years.
Target announced Feb. 28 that it is raising its starting wage for workers in some positions to up to $24. The retailer said the increase will apply to hourly workers at its discount stores, supply chain facilities and headquarters. Target in 2020 set its minimum wage at $15. That will remain in place, but Target said some workers will qualify for higher starting pay based on the nature of their job and the prevailing competitive wages in their local market.
Minneapolis-based Target Corp. is No. 6 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in North America, with nearly 1,900 locations.
