Target Corp. (TGT, Financial) announced on Tuesday it plans to invest up to $5 billion to continue scaling its operations in 2022.
The retail chain will invest in its physical stores, digital experiences, fulfillment capabilities and supply chain capacity that further differentiate its retail offering and drive continued growth.
“Years of investment in our team and business have driven our sales beyond $100 billion and positioned Target to meet the needs of our guests no matter how they choose to shop,” Michael Fiddelke, chief financial officer of the Minneapolis-based company, said in a statement. “We see substantial opportunities to build on our core capabilities to drive deeper guest engagement and long term growth.”
In 2022, Target plans to open approximately 30 stores, reaching more guests in new neighborhoods, according to a release. The stores will range in footprint, from mid-size locations in dense suburban areas to small-format stores in city centers like Charleston, South Carolina and New York’s Times Square. This flexibility enables Target to open stores of any size to meet community needs.
In addition to new stores, the mass merchandiser 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, the release noted. 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.
Target’s in-store and online experiences that elevate strategic brand partnerships, like Ulta Beauty (ULTA, Financial), Disney (DIS, Financial), Levi Strauss (LEVI, Financial) and Apple (AAPL, Financial), build relevance with guests and drive incremental growth. Following the opening of 100 Ulta Beauty at Target shop-in-shops in 2021, the company is planning to open more than 250 new locations by the end of 2022 – with plans to operate at least 800 Ulta Beauty at Target locations over time.
The retailer’s ongoing technology investments fuel growing digital capabilities like Roundel, which optimizes advertising placements on Target.com to deliver a more relevant, personalized guest experience and create value for partners. Roundel drove more than $1 billion in value in 2021, and the company expects that to grow to over $2 billion in the next several years.
Technology enhancements in 2022 will also enable guests to purchase Supplemental Nutrition Assistance Program-eligible grocery items on Target.com, building on the SNAP payment capabilities in stores. With this functionality, guests 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.
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 executives also released fourth-quarter and full-year 2021 results on Tuesday. For the fourth quarter, comparable sales grew 8.9%, on top of 20.5% in fourth-quarter 2020. Comparable traffic grew 8.1%, on top of 6.5% in the prior-year quarter. More than 95% of Target’s fourth-quarter sales were fulfilled by its stores. Earnings per share established an all-time high with GAAP earnings of $3.21 per share and adjusted earnings of $3.19, despite significant investments in team, price and inventory availability.
For all of 2021, Target delivered $106 billion in total revenue, having grown nearly $28 billion, or more than 35%, over the past two years. Comparable sales grew 12.7%, on top of 19.3% in 2020. Comparable traffic grew 12.3%, on top of 3.7% a year ago. Total sales have grown more than $27 billion since 2019, reflecting more than $14 billion of additional store sales and digital sales growth of nearly $13 billion.
