Target Scales Back Construction Plans to Keep Up with Immediate Demand

Target Scales Back Construction Plans to Keep Up with Immediate Demand

Sales in food, beverage, and home essentials are up 50 percent for late March, but higher-margin discretionary categories are down.

Target will delay some store remodel projects and new construction planned for 2020 in order to focus on the unusually high demand for same-day services prompted by the pandemic.

The Minneapolis-based retailer had planned to remodel 300 stores this year and is revising that to 130. Those already underway will be completed; the rest will be delayed. The company now plans to open 15 to 20 small format stores in 2020; down from the 36 previously announced. And plans to add fresh grocery and adult beverages to the drive up and order pickup programs are 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,” Target chairman and CEO Brian Cornell said in a statement Wednesday, calling his team’s efforts “nothing short of heroic.”

Sales for late February and early March are up 3.8 percent, but in food and beverage and home essentials, sales are up 50 percent over the same period last year. Target is seeing an uptick in other categories one might expect while the nation stays home: entertainment, home office and home activities. However, higher margin discretionary categories including apparel and accessories are down more than 20 percent, which could hurt earnings overall. Target estimates that new cleaning routines in stores and distribution centers, in addition to the $2 an hour pay raise for full and part-time team members until at least May 2, will cost more than $300 million.

Said Cornell, “Ensuring we can take care of our team and deliver for the millions of guests who are counting on us remains our top priority.”