Target executives set an ambitious plan to increase revenue 50% over the next decade
Target executives unveiled a revamped loyalty program at an investors meeting in New York on Tuesday and said they plan to add 300 new stores over the next decade .
In total, the Minneapolis-based retailer set an ambitious goal to increase revenue by $50 billion, or roughly 50%, over the next 10 years, mostly from a mixture of additional stores and an expected rebound in sales from the current dip it’s trying to dig out of.
Target’s shares jumped 12% after the company reported better-than-expected fourth quarter profits and a forecast for the coming year that showed comparable sales growing in late summer and fall after declining for the last three quarters.
One of the highly anticipated new initiatives Target unveiled Tuesday is a paid membership program called Target Circle 360, which some experts see as Target’s answer to Amazon Prime and Walmart+.
It offers similar benefits to a Shipt membership, such as unlimited free same-day deliveries on orders of more than $35 and access to the Shipt Marketplace, which offers same-day delivery from more than 100 retailers. Target owns Shipt.
The program will launch April 7 with an introductory promotional price of $49, but will be $99 after that, the same price as a Shipt membership.
It is also rebranding its credit card from Target Redcard to Target Circle Card, which will continue to give customers 5% off every Target purchase as well as free two-day shipping on thousands of items. Credit card holders will also be able to continue to become Target Circle 360 members at the price of $49.
In addition, Target will continue to offer its free-to-join Target Circle program, which it launched in 2019 and already has more than 100 million members. But it will now automatically apply deals and promotions at the checkout so customers no longer have to search for add offers through the app.
In the meantime, executives said they expect sales trends this spring to continue to be challenged and forecast comparable sales for the current quarter to be down 3% to 5%. But it also is betting on a turnaround in sales later in the year. It has forecast sales to be flat to up 2% for the full year.
Its comparable sales – a closely watched metric that includes online sales and sales at stores open at least a year – slid by 4.4% in November, December and January.
But it also reported surprisingly strong profits in the quarter. Net income jumped 58% to $1.4 billion in the fourth quarter. And earnings per share of $2.98 was better than analysts’ expectations of $2.41.
The lift was thanks in part to more than $500 million in cost-cutting measures last year as well as lower freight and fulfillment costs. It also had fewer markdowns than the year before when it dealt with a glut of inventory that ate into profit margins.
Target leaders have been saying for months that consumers have been pulling back as their budgets have become more constrained from higher prices for basics like food. While inflation has eased, many prices remain higher than they were a couple years ago. Also, they point to higher interest rates, increased credit card debt and the return of student loan payments as pinching their customers’ wallets.