Target Builds on Momentum, Announces 2021 Strategic Investments

Rhea-AI Summary

On March 2, 2021, Target Corporation (NYSE: TGT) announced a plan to invest approximately $4 billion annually to enhance its retail capabilities. Following a record financial performance in 2020, the company aims to accelerate new store openings, remodel existing stores, and improve fulfillment services. This includes increasing the availability of fresh food through Drive Up services and expanding partnerships with brands like Ulta Beauty and Apple. Target also plans to test new sortation centers to enhance delivery efficiency and expects to open new distribution centers in 2021.

Positive

• Plans to invest approximately $4 billion annually to enhance retail capabilities.
• Record financial performance in 2020 indicating strong consumer demand.
• Accelerated store openings with plans for 30-40 new stores each year.
• Expansion of fulfillment services including same-day delivery options.
• Increased presence of exclusive brands generating over $1 billion in annual sales.

Negative

• None.

MINNEAPOLIS, March 2, 2021 /PRNewswire/ -- Target Corporation (NYSE: TGT) today announced its plan to invest approximately $4 billion annually during the next several years to continue scaling capabilities across its retail platform. Building on years of sales growth and a record 2020 financial performance, Target will accelerate new store openings and store remodels, enhance fulfillment services and strengthen its supply chain as it provides guests with a safe, easy and convenient shopping experience. 

"2020 was a record-breaking year thanks to the work of our team and their commitment to serving our guests amidst unprecedented demand. As we head into 2021, we are building on the aspects of our differentiated model that make Target the preferred one-stop-shop for millions of guests," said Michael Fiddelke, chief financial officer, Target. "The bold investments planned for the next few years will scale key capabilities across stores, fulfillment, and supply chain to drive deeper engagement with new and loyal guests, continued market share gains, and long-term, profitable growth."

Enhancing Fulfillment Services and Store Experience

Millions of guests took advantage of Target's same-day services for the first time last year, and these fast-growing fulfillment options will get even easier and more convenient in 2021. After the enthusiastic response to last year's addition of fresh, refrigerated and frozen food items to Drive Up and Order Pickup nationwide, Target will increase the total fresh and frozen food pickup assortment. Additionally, following a successful initial trial in hundreds of stores, adult beverage pickup will be offered in 800 more stores in the next few months.

Technology improvements will also offer Drive Up guests a more personalized experience in the Target app. This includes informing team members where to place the order in their vehicle or authorizing a different guest, such as a family member, to pick up the order.

Throughout the pandemic, guests have turned to Target for its multi-category assortment of owned and exclusive brands, national brand favorites and brand partnerships. The retailer ended 2020 with 10 owned brands generating $1 billion or more in annual sales each, four of which surpassed $2 billion. Target will continue to bring brand partnerships to life in stores and online with the opening of approximately 100 Ulta Beauty at Target shop-in-shops in 2021, with plans to add hundreds more over time. Building on its more than 15-year relationship with Apple, Target has introduced a new Apple shopping destination online and in 17 stores, with an extended assortment, expanded footprint and service enhancements. More locations are scheduled to roll out this fall.

New Store Openings & Remodels

Following 30 store openings in 2020, including adding a record 29 new small-format stores in a single year, Target plans to accelerate the pace and open 30-40 new stores each year to meet community needs in urban centers, college campuses and dense suburban cities across the country.

In urban centers such as New York City, Los Angeles and Portland, Target will open more small-format stores to reach new guests. In dense suburban areas surrounding cities such as Denver or Brooklyn, Target has identified sites for new mid-size stores to serve new guests that fill retail gaps. Across college campuses, including the University of Georgia and University of Michigan, Target will open new small-format stores to introduce its unique shopping experience to new, college-aged guests to form lifelong relationships.

Target expects to accelerate its store remodel program this year and complete approximately 150 in time for the holiday season, with plans to remodel more than 200 stores a year beginning in 2022. The future store design will focus on safety and ease, with additional contactless features, updates that facilitate same-day fulfillment and more room for social distancing.

Last-Mile and Replenishment Capabilities

To add capacity to Target's fulfillment operation and further scale its stores-as-hubs model, the company is testing a new type of facility in Minneapolis called a sortation center and expects to open five more in 2021.

With this new last-mile capability, the sortation center collects online orders from local stores multiple times a day and sorts them into efficient routes for carrier delivery. This pulls the sorting activity out of store backrooms so it can be consolidated more efficiently at one facility, giving store teams more time and space to fulfill additional orders, while reducing the load on external carriers. This process increases store fulfillment capacity, reduces last-mile fulfillment costs and speeds delivery to guests.

The company is also making investments in its supply chain replenishment capacity to support stores' continued growth well into the future. This year, Target expects to open two distribution centers, one in Delaware and one in Chicago. Two more are planned in 2022 to support the east and west coastal areas.

Miscellaneous

Statements in this release regarding the company's future financial performance, planned investments in its business, enhancements to its fulfillment services and store experience, its brands and brand partnerships, new store openings and remodels, and its last-mile and replenishment capabilities, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause the company's actions to differ materially. The most important risks and uncertainties are described in Item 1A of the company's Form 10-K for the fiscal year ended Feb. 1, 2020 and Item 1A of the company's Form 10-Q for the fiscal quarter ended May 2, 2020.

Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update any forward-looking statement.

About Target

Minneapolis-based Target Corporation (NYSE: TGT) serves guests at nearly 1,900 stores and at Target.com. Since 1946, Target has given 5 percent of its profit to communities, which today equals millions of dollars a week. For the latest store count or for more information, visit Target.com/Pressroom. For a behind-the-scenes look at Target, visit Target.com/abullseyeview or follow @TargetNews on Twitter.

 

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SOURCE Target Corporation

FAQ

What is Target's investment plan for 2021?

Target plans to invest approximately $4 billion annually to enhance its retail capabilities.

How did Target perform financially in 2020?

Target reported record financial performance in 2020, reflecting strong consumer demand.

How many new stores will Target open in the coming years?

Target plans to open 30-40 new stores each year to meet community needs.

What fulfillment services is Target enhancing?

Target is increasing the availability of same-day services and expanding its fresh food pickup options.

What partnerships is Target expanding in 2021?

Target is expanding partnerships with brands like Ulta Beauty and Apple, including new shop-in-shops.