Minneapolis based Target just wrapped up its annual financial community meeting in New York City. There, leaders shared the retailer’s Q4 and full-year 2018 results, plus the latest progress on their multi-year strategy, and a look at what’s on the horizon.
Target delivered better-than-expected earnings during the holiday sales period as their rapidly evolving private brand portfolio and easy delivery options helped deliver its strongest traffic and same-store sales growth in more than ten years.
The retailer’s adjusted earnings per share hit a record and its digital sales rose more than 25% for the fifth year in a row.
Target’s official blog “A Bullseye View” caught up with Chairman and CEO Brian Cornell to learn more about some big things happening at the retailer.
First off, what can we take away from today’s results?
It’s been an exciting morning! We closed out the fourth quarter with a 5.3% comp, our strongest finish since 2004. And for full-year 2018, we reported our most successful year-over-year performance in well over a decade, including an all-time company record Adjusted EPS of $5.39. We’re also pleased to see our market share continuing to grow in every major category across our business.
When we announced our strategic investment in our business in 2017, we said that 2018 would be a transition year. Instead, it turned out to be one of the most productive in our history, making our results even more meaningful. Every decision we make is guided by our guests and our purpose, which is helping every family we serve find joy in life’s everyday moments. As a result, Target has emerged as one of the clear leaders in the industry, helping to shape the future of retail because of the ongoing success of those investments.
Target’s strategy has come a long way. How did we get to where we are today?
This story starts two years ago, when we laid out an ambitious investment plan to give guests more of what they loved about Target. We committed to reimagine our stores, reinvent our supply chain, reposition our owned brand offerings, rethink pricing and promotions, repurpose our technology and reinvest in our team. While other retailers were closing stores and cutting back, we listened to our guests, and bet big on new ways to deploy our most powerful assets—our stores and our people—to create shopping experiences like only Target can.
Since then, we’ve done exactly what we set out to do, and moved faster than we expected. We’ve built up the broadest range of fulfillment options in retail. Guests coast to coast can now have a Shipt shopper deliver groceries to their door, or pull up in our parking lot and have a team member bring their purchase right out to their car with Drive Up. We’re well on our way to remodeling more than 1,000 stores to make shopping even easier and more inspiring. And we continue to launch exciting new brands that keep guests coming back for more.
The strategy is clearly working. We’re well on our way to becoming America’s easiest place to shop, and our guests are loving what they see. Of course, the work never stops, and the entire Target team around the world is dedicated to keeping our momentum going as we move into the next phase.
What are you most excited for in the coming year and beyond?
Where to start? With so much progress in the books, this year will be about building on the durable model we’ve created in the past two years to fuel the next phase of our strategy. For example, we’ll continue to innovate across our supply chain to get smarter, savvier and make our operations more cost-efficient by leveraging our stores to fill orders even faster, and leaning into the new delivery options that our guests love.
New fulfillment services like Drive Up are growing the fastest with our guests, and they carry lower costs, so we’ll build on this success to give even more guests access to them. The goal is to get guests what they want faster and more reliably, and do it without breaking the bank. And we’re well on our way: During our fourth quarter, stores fulfilled three of every four orders—effectively doing the work of 14 fulfillment centers.
We’ll also keep investing in new owned brands, like our recently announced premium wine assortment, The Collection, and new intimates and sleepwear brands Auden, Stars Above and Colsie. We just announced our latest design collab with vineyard vines, coming this spring. In fact, this year marks the 20th anniversary of our coveted design partnerships. And our teams are exploring new ways to reward loyal guests, like our Target Circle test program.
All of these efforts will help us deliver profitable, sustainable growth and continue gaining market share. I’m excited to see that come to life in so many ways.
What’s next for the Target team?
I’m so proud of this team and all they continue to accomplish. Our team members put so much energy into helping every family we serve find joy in all of life’s moments. These past few years, we’ve invested in technology to make our back-of-the-house operations more efficient, so our teams could focus on serving guests. And they’ve really stepped up to the challenge. You may have heard that we recently celebrated their success in beating our holiday sales goals by adding jeans as a permanent option to wear on the job—a reward well-earned!
Our teams are the ones making all those incredible guest experiences happen. So to make sure we keep taking care of our teams and their families, we’ll continue our industry-leading commitment to raise our starting wage to $15 by the end of 2020, along with many other investments in their career development, health and well-being.
Let me tell you—reflecting on the team’s progress and thinking about all the amazing things in Target’s future gets me really excited to come to work every morning. I’m not sure I’ve ever been prouder to be a part of this brand, and to lead this great company, than I am right now.