The analysts pointed to key initiatives, including the retailer's digital capabilities loyalty program growing Roundel advertising business, which the company said hit $1 billion in value for 2021 success in opening new stores investments in workers, including recently announced wage hikes and adding "newness" across categories through private brands and partnerships with others such as Disney.īut Target is not without its challenges. The retailer's 2021 results and investor meeting this week "increased our confidence in the company’s ability to gain market share and generate strong earnings growth by scaling existing initiatives, expanding omni-channel capabilities, and leveraging customer insights," Telsey Advisory Group analysts led by Joe Feldman said in a research note Wednesday. It also plans $4 billion to $5 billion a year in capital spending, and a return on invested capital reaching up to 30%. For the years ahead, the company now expects revenue and operating profit growth in the mid-single digits. The retailer's comp sales for 2021 increased 12.7%, driven by a similarly scaled increased in foot traffic. It's obvious why Target feels comfortable investing more money in its stores. The 200 remodels on the docket for Target play to both functions, with brighter lighting and elevated merchandise displays along with enhanced hold space and pickup areas.
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Stores also function as hubs, fulfilling the vast majority of the retailer's offline and online sales and making them pickup centers for customers who its curbside and buy online, pick up in store services. (That growth, as CEO Brian Cornell noted during an investor meeting, amounts to $27 billion in sales over the past two years.) The retailer has played around with new formats, as well refreshed its existing stores to make them more inviting and shoppable.
Target's stores are at the center of its growth in recent years.
Its most recent fourth quarter and yearly results showed just how big the payoff has been. The retailer dumped billions of dollars into its business, including in its stores, before investing in brick-and-mortar became cool again. Target's leadership has enjoyed something of an I-told-you-so moment this week, if not the past two years.
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