Target enjoys strongest sales growth since 2005
Retailer Target reported a 6.5 percent same-store sales spike in the latest quarter, its biggest growth in 13 years.
Strong store traffic was cited as the main growth driver, as well as store revamps and improved e-commerce operations and what CEO and Chairman Brian Cornell said reflects the retailer’s investment strategy.
Total revenue jumped 6.9 percent, to $17.78 billion in the second quarter.
“We took a path that said we are going to invest in the long-term and several years ago we decided we are going to invest in our stores, invest our brand, invest in our team and invest in new fulfillment capabilities,” he stated in an interview with CNBC. “And those are starting to mature. They’re now at scale and you’re seeing the reaction from the consumer and our guests and those show up in our recent earning report.”
The Target leader told CNBC the company is focused on three areas: providing a great experience that’s inspiring in the stores, making shopping convenient and easy and offering new brands.
He said Target’s “core case ability” has been its design and development team which is responsible for bringing unique brands — brands that are differentiated.
The retailer plans to spend about $3.5 billion a year for the next couple of years on its investment strategy. Lat year, Target spend about $3 billion.
“We’re still in the early stages of rolling out our strategy and I expect next year we’ll remodel more stores, another 300 stores. We’ll open up new great urban stores and on more college campuses,” he said.
Target also plans to expand its small store format portfolio.
“We’re getting in new neighborhoods where we have not before,” said Cornell, adding Target will continue to invest in technology, supply chain and fulfillment. He also said he thinks of Target’s two top competitors (Walmart and Amazon) every day.
“And we measure ourselves against their performance. We are fighting for those footsteps, fighting for the clicks and right now I think we are starting to build momentum.”
In its earnings report, Target stated the traffic growth is the strongest since it began reporting traffic in 2008. Its comparable digital sales grew 41 percent, a healthy increase from last year’s 32 percent growth.