Two years later a pandemic brought Target Corp.
TGT 9.84%
billions in sales, the retailer wants to continue to grow by building more e-commerce stores and centers and new business lines.
Sales rose at the Minneapolis-based retailer in the last quarter, aided by more store traffic during the holiday season and growth in its commodity categories, including food, clothing and household goods.
Comparable sales, which include sales from stores or digital channels operating for at least 12 months, rose 8.9 percent in the quarter ended Jan. 29 from a year earlier, the company said. Digital sales increased by 9.2%.
For the full year, Target’s revenue reached $ 106 billion, compared to $ 77.1 billion for the year ended February 1, 2020, before the pandemic overturned the global economy and consumer buying patterns.
Other big retailers like Walmart Inc.
reports strong sales growth in the last fiscal year, including the holiday shopping period. These retailers have been able to use their powerful and e-commerce networks to address labor shortages due to the Omicron variant, supply chain problems and rising prices.
Smaller retail chains, such as Kohl’s Corp.
KSS 2.12%
they said the delay in the arrival of inventory in stores has slowed sales growth, and the complexity of the pandemic has reflected profits in recent months.
The Covid-19 pandemic strained global supply chains, causing backlogs, which increased costs. Some companies are now looking for long-term solutions to prepare for future supply chain crises, even if these strategies cost a fortune. Photo illustration: Jacob Reynolds
Consumer spending remains high even as prices rise. In January, expenditures rose by 2.1% seasonally adjusted compared to the previous month, while personal incomes remained stable, the trade ministry said. However, studies show a growing gloom among consumers during the last phase of the pandemic, combined with the effects of inflation, among other events.
“Consumers are still worried about Covid, but they are looking for that note of normalcy in their lives,” Target CEO Brian Cornell told analysts on Tuesday.
Financial performance in the first two years of a pandemic will be difficult for many retailers to replicate. Target expects earnings and adjusted earnings per share to grow at a slower pace this year than 2021. Kohl’s, which also reported quarterly financial results on Tuesday, forecasts net sales in fiscal 2022 to increase by 2% to 3% , compared to almost 22% increase the previous year.
Another chain of department stores, Nordstrom Inc.,
predicts revenue growth will slow to between 5% and 7% this year, but said that as a result of improvements in its business, it may resume dividend payments in the current quarter after a nearly two-year hiatus.
Target is focusing on investing in its stores while increasing digital sales, company executives told analysts at an event in New York on Tuesday. About 19% of Target’s total sales are now digital, up from 8.8% in 2019. Most of these sales come from in-store inventory – store workers pack orders for home delivery or for delivering to customers in car parks.
The company is building large sorting centers, large warehouses that use automation to quickly pack same-day delivery orders near urban centers such as Chicago to expand the business faster, executives said. He also plans to expand Roundel, his internal media operation that works with brands and advertising agencies, to a $ 2 billion operation over the next few years.
Dedicated shares rose 9.8% in trading on Tuesday.
Kohl’s relies on partnerships like the one it has with cosmetics retailer Sephora to help boost sales. He also plans to invest in his physical locations, including moving goods such as active clothing to the front of stores.
The latest report from the department store chain is also coming, as it repulses criticism from investor activists. He rejected a $ 9 billion takeover offer from a consortium backed by hedge fund Starboard Value LP. The rejection drew criticism from Jonathan Duskin, a managing partner at Macellum Advisors GP LLC, which has a 5% stake in the retailer and is pushing for changes to the board.
On Tuesday, CEO Michelle Gus dismissed criticism that the company’s board was not open to opportunities to increase shareholder value. Kohl’s also said it would double its quarterly dividend and buy back at least $ 1 billion of its shares this year, which Ms Gass said in an interview as proof of the company’s confidence in its strategy.
“While we have great confidence in our future, we are testing and evaluating this plan against other alternatives,” she said.
Kohl shares rose 2.1%.
In response to inflation, Target seeks to keep prices lower than competitors this year, executives said. “We have a lot of leverage to fight costs and the price is the one we pull last, not first,” said Michael Fidelke, the company’s chief financial officer.
The company expects severe labor market and supply chain problems to continue this year and is monitoring consumer spending without benefiting from government incentives, he said. On Monday, Target said it would offer hourly workers a minimum wage of $ 15 to $ 24 and expand the group of eligible employees.
Target is also monitoring the situation in Ukraine to determine whether there will be a wider impact on the supply chain, Mr Cornell, the chief executive, told reporters. Although the company does not supply products directly from Ukraine, executives said the company would use its scale to be flexible in dealing with any changes.
Write to Sarah Nassauer at [email protected] and Charity L. Scott at [email protected]
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