MINNEAPOLIS _ In an investors meeting Tuesday that touched on a wide range of issues, Target executives said the retailer would start adding fresh groceries and alcoholic beverages to its store pickup services and open more small-format stores, including a new convenience store-size concept.
They also said they have not seen a significant impact on their current business or economic outlook for the coming year due to the coronavirus outbreak.
Chief Financial Officer Michael Fiddelke said the company is closely monitoring the situation and impact on its supply chain, but the company feels well-positioned to weather any disuptions and isn't expecting its sales for the year to deviate from its plan for comparable slaes growth in mid single-digits.
CEO Brian Cornell acknowledged there could be some delays in getting some products in, but said the company is working closely with its domestic vendors to increase inventory of items such as household essentials and food and beverages. He added that Target has seen an uptick in traffic to its stores in recent days as consumers stock up on supplies as the coronavirus spreads.
Executives also told investors the company will begin adding fresh grocery and alcohol beverages to its Drive Up and in-store pickup services. It will test the enhanced fresh grocery options, which include items such as milk and banadas, first in the Minneapolis area stores this spring with plans to have it added to about half of its stores by this holiday. It will also pilot adding adult beverages to those services at more than 100 stores in Florida and Oregon this spring with plans to expand it to most stores by the holidays.
The Minneapolis-based retailer also will open 36 small format stores this year, a record number for these smaller models like the ones in Dinkytown and Uptown, executives said during the company's annual investors' meeting.
At the same time, Target is looking at a new convenience store size model of about 6,000 square feet, or about half the size of its smallest store. Such stores would be tucked into cities like New York and Philadelphia and would also offer in-store pickup of online orders in addition to a more limited assortment. It expects to sign a lease for one of these new concepts this year, with plans for it to open next year. Exectives said they see potential for hundreds of these kinds of locations down the road.
The company said it would also begin expanding robotics it has been testing in the Twin Cities to more warehouses that send better-sorted boxes to stores to help cut down on time employees spend stocking shelves.
The meeting was originally scheduled to be held in New York. But over the weekend, the company decided to instead broadcast it remotely from Minneapolis given the "rapidly evolving situation regarding the coronavirus."
After previously reporting the first two months of the holiday quarter earlier this year, the comparable sales for the full quarter were not much different. Target's shares tumbled in January when it said that comparable holiday sales rose 1.4%, well below the 3% to 4% the company had forecast. It blamed the performance mostly on weaknesses in toys and electronics, which account for a larger part of Target's sales over the holidays.
In the full fourth-quarter, Target said comparable sales grew 1.5%. Its net earnings grew 4.4% to $834 million. When adjusted for one-time items, it earned $1.69 a share, which was better than what analysts were expecting.
"With eleven consecutive quarters of positive comparable sales growth, driven by healthy performance in both our stores and digital channels, Target's results demonstrate that we've built a sustainable business model that drives strong top-line growth and consistent bottom line performance," CEO Brian Cornell said in a statement.
For the full year, Target saw comparable sales grow 3.4%.
