Target CEO says record-setting 2020 was no ‘fluke’
Shares of Target fell yesterday after the retailer chose not to release guidance on the upcoming fiscal year due to the complexity of forecasting in the age of COVID-19. For those doubting the retailer’s prospects, only one rational reply comes to mind: “Give me a break.”
That is essentially the sentiment expressed by Target CEO Brian Cornell on the retailer’s earnings call with analysts, where it was reported that the company’s sales revenue increase last year topped what it did in the previous 11 years combined.
“Far from being a fluke, this performance is further proof that we built a business model that is working as intended, one that puts Target in a category of its own,” said Mr. Cornell.
“The enormous investments we made in supply chain, store operations and technology capabilities are already powering exponential growth in digital commerce. They’ve enabled us to use our stores as showrooms and service centers, but also as hubs for digital fulfillment,” he said.
“Without these investments, we simply wouldn’t have been able to satisfy the exploding guest demand for same-day services, represented by more than 600 percent growth in Drive Up. Likewise, Shipt is an extraordinary capability that grew by more than 300 percent last year and will continue to grow as more guests recognize the power of having their purchases brought to their doorstep in as little as an hour.”
The retailer, which fulfilled 95 percent of its online orders from its stores in the fourth quarter, plans to continue investing in its business. It is raising its capital investments from $2.59 billion last year to $4 billion annually. The investments are being earmarked for new store openings, remodels, fulfillment services and the building out of Target’s supply chain network. The retailer plans to open 30 to 40 new locations a year and is adding new distribution centers in Chicago and Delaware.
Mr. Cornell also spoke to the importance of Target’s employees in its success and mentioned the chain’s commitment to standing by its workforce with safety measures and a $15 minimum wage for hourly employees.
Merchandise, including own brands and partnerships with key brands such as Levi’s and Ulta Beauty, was also emphasized as a key contributor to Target’s ongoing success.
- Target Corporation Reports Fourth Quarter and Full-Year 2020 Earnings – Target Corporation
- Target (TGT) CEO, Brian Cornell on Q4 2020 Results – Earnings Call Transcript – Seeking Alpha
- Target Corporation – Yahoo Finance
DISCUSSION QUESTIONS: What do you see as the keys to Target’s success in recent years? Where do you see Target’s biggest opportunities and challenges as it continues to try and grow its market share coming off its strong performance last year?