MINNEAPOLIS (AP) — Target is investing another $2 billion in its business this year to spruce up its store experience, remodel stores and invest in its workers as it tries to turn around a persistent sales malaise and reclaim its authority on style.
The investment, announced Tuesday at its annual investor meeting at its headquarters in Minneapolis, comes as the discounter reported another quarter of declining sales and profits amid its struggles to regain
its footing with customers who are going elsewhere for fashion, home and other needs.
Tuesday’s report offered some hope for the business. The company delivered a solid annual profit outlook that was better than Wall Street had been projecting. It also said it believes net sales will grow every quarter this year.
Target said comparable-store sales rose to start the current quarter.
“This is a new chapter, and it’s all about growth,” said CEO Michael Fiddelke, a 20-year company veteran who succeeded longtime CEO Brian Cornell last month. “We’ll do so by playing our own game and making big changes to delight our guests.”
Target had already announced in November it planned to invest another $1 billion in capital expenses for a total of $5 billion this year. But on Tuesday it offered more details on its capital plans. That includes opening 30 new stores and plans to remodel 130 of its existing stores. Many of the stores that are being refreshed haven’t been spruced up in a decade, Target executives said.
But Target said on Tuesday it would also spend another billion dollars in additional operational expenses, including hundreds of millions of dollars to support additional store labor and training as well as investments in artificial intelligence.
Target said that it’s launching a new beauty area called Target Beauty Studio in 600 stores this fall, which will offer upscale beauty products and enhanced product expertise from staff. The new area will partly replace its shops with Ulta, which is ending its partnership with the retailer in August, the company said.
Fiddelke takes over with Target’s hometown of Minneapolis a front line of sorts in President Donald Trump’s campaign to curb illegal immigration. Some of the company’s stores have become a flashpoint in a pushback against U.S. Immigration and Customs Enforcement. The company has faced pressure to take a public stand against the immigration crackdown.
Even before the immigration clashes, Target had been facing protests and boycotts over the company’s decision to roll back its diversity, equity and inclusion initiatives. Critics believe it’s a betrayal of Target’s philanthropic commitment to fighting racial disparities and promoting progressive values in liberal Minneapolis and beyond.
That is outside of a volatile economic and political environment that has been intensified by an aggressive trade campaign under Trump. The White House is now seeking a global tariff of 15%, after the U.S. Supreme Court struck down many of the far-reaching taxes on imports that he had imposed over the last year.
While the pace of inflation has cooled, consumer prices have soared about 25% over the past five years. U.S. companies are facing a hazy outlook with American households hurting, and the Trump administration is trying to work around the Supreme Court ruling to keep his duties in place.
And Target customers have soured on what they see as untended and messy stores with lackluster merchandise.
As the company’s nearly 2,000 store locations have become shipping hubs for online operations, customers say the in-store shopping experience has suffered with staff fulfilling digital orders rather than tending to store aisles.
Target is also facing stiffer competition from Walmart, which has stepped up its focus on fashion and other goods.
Fiddelke has already reshuffled the leadership team at Target, boosted spending on in-store store staffing and made cuts at distribution facilities and regional offices, according to a memo sent to employees in February.
Target said on Tuesday it’s infusing fresh new styles across merchandise categories to set itself from its competitors. For example, in the home area, 75% of the company’s decorative assortment will be new.
The company is also reworking its store label brands such as its home goods brand called Threshold among other store brands. Target is also using an artificial intelligence tool to better spot trends. That will help cut the time frame from a design concept to store shelves in a matter of weeks from over a year in some cases, according to Cara Sylvester, Target’s chief merchandising officer.
And in food, the company is hoping to drive more shopper trips by expanding its fresh produce while also offering innovative items from niche brands like Fishwife, which sells canned fish. This year, it plans to increase new assortment by nearly 50%, Target executives said.
The company earned $2.30 per share, or $1.05 billion, for the three-month period ended Jan. 31. That compares with $2.41 per share, or $1.10 billion, during the year-ago period. Adjusted earnings per share for the most recent quarter was $2.44.
Sales fell 1.5% to $30.45 billion during the latest period. For the full year, sales fell nearly 2% to $104.78 billion.
Analysts were expecting $2.16 per share on sales of $30.46 billion, according to a survey by FactSet.
Comparable sales — sales at established stores and online channels — fell 2.5%, followed by a 2.7% dip in the fiscal third quarter. The latest figure marks 11 quarters out of the past 13 that Target has posted either declines or flattish growth for this measure.
Target said that sales and customer traffic accelerated in the final two months of the quarter. And it saw sales growth in food and beverage, beauty and toys for the latest quarter.
Target said that it expects net sales for the year to increase by 2%, which would mean it expects sales to reach $106.88 billion. That’s a bit above analysts’ expectations of $106.7 billion. Target also anticipates earnings per share to be in the range of $7.50 to $8.50. Analysts are expecting $7.30 per share for the year, according to analysts polled by FactSet.
Target shares rose 6.8% in afternoon trading while the broader market slid.
