Target’s 2020 Revenue Surpassed $93B
Target Corp. on Tuesday reported 2020 revenue of $93.5 billion, marking a $15 billion increase over sales in the prior year. The increase is larger than total sales growth in the last 11 years combined, CEO Brian Cornell said in a Tuesday morning investor call.
The company’s total profit also ticked up to $4.368 billion, marking a 33 percent increase over 2019. In the call, Cornell said that the Covid-19 pandemic simply accelerated the company’s long-term plan to build the “retail platform of tomorrow.”
“At the heart of the platform was the belief that consumers would continue to flock to our stores,” Cornell told investors. “We placed the physical store more firmly at the center of our omni-channel platform.”
While it’s true that many customers have shifted to digital shopping options, Cornell maintained that the retailer’s brick-and-mortar stores have played a key role in Target’s growth. The company’s fourth quarter results seem to bear that out: In the quarter, more than 95 percent of Target’s sales were fulfilled by stores.
“When the pandemic hit last spring, our guests’ shopping behaviors changed nearly overnight,” said John Mulligan, Target’s chief operating officer. “We saw heavy stock-up trips, huge in-store surges, and a quick shift to online shopping.”
Just how explosive was Target’s sales growth in 2020? CFO Michael Fiddelke shared one perspective.
“Here’s one way to think about it: At our current average sales per store, last year’s sales growth of $15 billion was equivalent to the addition of more than 300 new Target stores,” he said. “If we had actually opened that many new locations, we’d have needed some additional upstream capacity. And that need is the same, whether growth is coming from a bigger store footprint or higher productivity in our existing [stores].”
Yet, there’s still another more pressing question: Can Target expect to maintain that level of growth in the future? It’s not clear. Like many big companies now, Target isn’t providing investors with any firm guidance predictions for the year ahead. There are still a number of unknowns around the Covid-19 pandemic, along with vaccine rollout. “In the face of continued uncertainty, the company is not providing sales and EPS guidance for Fiscal 2021 and beyond,” Target said in a statement.
As Fiddelke put it during the call: “Providing a lot of guidance would be an exercise in false precision.”
Still, Target did share a few other details about its plans for the new year. Small-format stores, like Target’s location in Uptown Minneapolis, will continue to play an important role. CEO Cornell said that the company plans to add about 30 to 40 new small-format stores each year “over the next several years.”
Expect more remodels of existing locations, too. Execs said that Target will spend about $4 billion in capital expenditures over the next few years on remodelling projects, new stores, and various “supply chain projects” to help shore up the company’s ability to replenish products.