MINNEAPOLIS, March 25, 2020 /PRNewswire/ -- Target
Corporation (NYSE:TGT) today announced business updates
in response to the impact from novel coronavirus
(COVID-19).
As the COVID-19 crisis has evolved, the Company has been
experiencing unusually strong traffic and sales, particularly in
its stores and same-day services, as guests rely on Target for
essential items like food, medicine, cleaning products and pantry
stock-up items. As a result, the Company has adjusted the expected
timing of some of its strategic initiatives, to support the team
and minimize potential disruptions in their work to serve the needs
of American consumers.
Updated plans for Target's remodel program
anticipate approximately 130 remodels in 2020, down
from the previous expectation of approximately 300. This will
allow remodel projects already underway to be completed, and move
all other remodel projects into 2021. Similarly, the Company now
expects to open 15-20 new small format stores in 2020, rather
than the 36 previously announced. This will allow
projects already underway to be completed, but move the remaining
new store projects into next year. In addition, the effort to
incorporate fresh grocery and adult beverages into the Company's
Drive Up and Order Pickup services is temporarily on
hold.
"We are prioritizing the work that's in front of us to
support our team, store operations and supply chain as
families across the country rely on Target for everything they
need in this challenging environment. I want to thank our
entire team for their efforts, which have been nothing short of
heroic," said Brian Cornell,
chairman and CEO, Target. "Over the past few weeks we've
experienced an unprecedented surge in traffic and sales, as guests
rely on our stores and same-day services. Ensuring we can take
care of our team and deliver for the millions of guests who
are counting on us remains our top priority."
Also announced last week, Target has raised its industry-leading
pay by $2 an hour for its store and
distribution center hourly full-time and part-time team members
until at least May 2. In addition,
the Company is offering a new option for team members who are 65 or
older, pregnant or those with underlying medical conditions to
access paid leave. Target's latest investments include bonuses it
is paying out to frontline team members, including, for the first
time, bonuses for 20,000 hourly store team leads who manage
individual departments in its stores across the country.
The retailer will continue to carefully monitor the situation in
the coming weeks and months and will revisit the timing of its
strategic initiatives after shopping returns to a more
predictable pattern. More information on how Target is supporting
its guests and team members in response to COVID-19 can be
found on Target.com/abullseyeview.
Update on Financial Performance
Target also provided an update on trends in the Company's sales
performance as well as the expected impacts of investments in team
member pay & benefits and changes to in-store
processes.
For the first three weeks of the first quarter, which began on
Feb. 2, total Company comparable
sales and category mix were in line with expectations and prior
financial guidance.
Beginning with the fourth week of February and into the first
part of March, the retailer saw an increase in traffic and
comparable sales across its multi-category portfolio. For the month
of February, total Company comparable sales increased 3.8
percent.
Beginning in mid-March, the Company experienced an even stronger
surge in traffic and sales, with category mix heavily concentrated
in the Essentials and Food & Beverage categories. Around that
time, strength also emerged within the portions of Hardlines that
support in-home activities, including Home Office and
Entertainment, while performance softened meaningfully in Apparel
& Accessories.
Month-to-date in March, overall comparable sales are more than
20 percent above last year, with comparable sales in
Essentials and Food & Beverage up more than 50
percent. During that same period, comparable sales in Apparel
& Accessories are down more than 20 percent compared with last
year.
While Target has maintained its low everyday prices during this
period, stronger-than-anticipated quarter-to-date sales have led to
gross margin dollar growth ahead of prior expectations. However,
continued sales declines in higher-margin discretionary categories
could result in lower-than-expected gross margin dollar performance
for the remainder of the quarter.
In addition, certain first quarter costs are anticipated to be
higher than prior expectations, driven by investments in pay and
benefits, the spike in merchandise volume in stores and the supply
chain, and the impact of additional hours dedicated to more
rigorous cleaning routines in stores and distribution centers
across the country. Collectively, these changes are expected to add
more than $300 million of incremental
costs to the Company's prior outlook for the first
quarter.
Given the highly fluid and uncertain outlook for consumer
shopping patterns and government policy related to COVID-19, there
is an unusually wide range of potential outcomes for Target's
first-quarter financial performance. As a result, the Company today
withdrew its prior guidance for first quarter and full year 2020
sales, operating income and earnings per share. In addition, while
Target will continue to invest in its business and team, the
Company is suspending share repurchase activity in the current
environment.
"During these unprecedented times, the benefits of our strong
balance sheet and diverse, multi-category assortment are
particularly important," said Michael
Fiddelke, executive vice president and chief financial
officer. "With the best team in retail focused on serving our
guests, and ample financial capacity to navigate a highly uncertain
outlook, we are confident that Target will emerge from the current
environment with an even stronger guest relationship and continue
to operate from a position of financial strength."
Miscellaneous
Statements in this release regarding the expected pace of
remodels and new stores, the timing of other strategic initiatives,
gross margin dollar performance, sales, incremental costs, share
repurchase activity, and future financial performance are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are
subject to risks and uncertainties which could cause the Company's
actual results to differ materially. The most important risks and
uncertainties are described in Item 1A of the Company's Form 10-K
for the fiscal year ended Feb. 1,
2020. Forward-looking statements speak only as of the date
they are made, and the Company does not undertake any obligation to
update any forward-looking statement.
About Target Corporation
Minneapolis-based Target
Corporation (NYSE: TGT) serves guests at nearly 1,900 stores and at
Target.com. Since 1946, Target has given 5% of its profit to
communities, which today equals millions of dollars a week. For
the latest store count or for more information,
visit Target.com/Pressroom. For a behind-the-scenes look at
Target, visit Target.com/abullseyeview or
follow @TargetNews on Twitter.
For more on the Target Foundation, click here.
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SOURCE Target Corporation