Minneapolis-based retailer Target today announced its fourth quarter and full-year 2016 results and the numbers were less than stellar. Fourth quarter comparable sales decreased 1.5%, compared to the guidance range of (1.5%) to (1.0%)1 and Fourth quarter comparable traffic was basically flat with a 0.2% increased.
During the meeting CEO Brian Cornell, COO John Mulligan and CFO Cathy Smith shared an overview of Target’s plans for the future. The big news of the day? We’re investing more than $7 billion in capital over the next three years, and about $1 billion in annual operating profits beginning in 2017, to grow sales faster, gain market share, adapt to customers’ rapidly changing preferences and give them, even more, reasons to choose Target.
“We’re investing in our business with a long-term view of years and decades, not months and quarters,” Brian said. “We’re putting digital first and evolving our stores, digital channels, and supply chain to work together as a smart network that delivers on everything guests love about Target, including more than a dozen new brands we’ll introduce over the next two years. We’re confident our strategy meets the challenges of today and will lead us well into the future.”
Introducing private brands customers love
Target will take the lessons learned from its successful recent launch of Cat & Jack and Pillowfort and continue to create new brands that truly resonate. In a move that will dramatically increase the size and complexity of their private brand portfolio the retailer will launch 12 new private brands over the next two years. The portfolio expansion will primarily focus on their apparel and home departments, helping to grow their most profitable categories and creating sustainable differentiation.
Enhancing digital experience
Digital leads the way. Target has grown their digital infrastructure to increase speed, stability, performance and capacity, doubling digital sales from 2013 to 2016, and will continue to accelerate their efforts. For example, later this year, they will provide shoppers with a streamlined experience by combining Cartwheel—their popular savings app—with their flagship Target app, offering customers one simple shopping solution.
Over the next three years, Target will reimagine more than 600 locations enabling a more digitally connected Target experience. That’s because the stores will both look and function differently. Case in point? Ship from Store: No longer are backrooms just storing products until they’re ready to move to the sales floor. These backrooms double as hyperlocal distribution centers, allowing the retailer to ship orders to customers from their own backyard. It’s a win-win: shoppers get their orders faster, and operations are more cost-effective. By 2019, all Target stores will have this capability. That’s on top of Order Pickup, a service that’s already available in all stores.
Opening small format stores
Target will open 30 small format stores in 2017, doubling their presence in dense urban markets and on college campuses. These stores serve as neighborhood hubs for customers to pick up online orders, bringing added convenience to their “Target runs.”. By 2019, the retailer will operate more than 130 small format stores.
Offering competitive prices every day
Target will refocus on offering competitive prices across their entire assortment every single day. Their investment in operating profits will help us pass along the.