Target plans to invest as much as $5 billion this year expanding services for customers, including a drive up service for returns, renovations at 175 stores and improvements in online shopping.
plans to invest as much as $5 billion this year expanding services for customers, including a drive up service for returns, renovations at 175 stores and improvements in online shopping.retailer announced the investments Tuesday during its annual investor meeting as it reported a 43% tumble in profits for the holiday quarter, reflecting the ongoing challenges of balancing more cautious consumer spending and rising costs.
Part of the reason inflationary pressures have eased, at least for some things, is a campaign by the Federal Reserve to cool spending, and the economy. Those efforts make using credit cards more expensive, which can negatively impact retailers. For the full year, Target expects comparable sales — those from stores open at least a year and online channels — will range from a low single-digit decline to a low single-digit increase.
Target has taken a bigger hit to its business compared to other big box retailers likely because it relies more on discretionary items like clothing and home furnishings. More than 50% of Walmart’s U.S. business comes from groceries; that number is 20% at Target. Last November, Target said it was slashing expenses with a goal of saving $2 billion to $3 billion over the next three years. At that time, it said shoppers were waiting to buy on sale, purchasing smaller packages and trading down to store brands instead of national labels, which tend to be more expensive.
Fourth-quarter profits fell to $876 million, or $1.89 per share, for the quarter that ended Jan. 23. That compares with $1.54 billion, or $3.21 per share, in the year-ago period.
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