Target (TGT) Boosts Omnichannel and Delivery Capabilities
Target Corporation TGT has been undertaking several strategic endeavors — be it new stores, owned brand innovations, national brand partnerships, expansion of same-day services or rollout of sortation centers — to drive engagement, traffic and market share gains. In recent developments, the company is likely to make a $100-million investment to boost its next-day delivery capabilities, per media sources. It is expected to add new sorting centers to expand such services. According to sources, management looks forward to having more than 15 sortation facilities by 2026 end.
Per media reports, the big-box retailer will expand these facilities in major markets across the United States. The company is likely to produce nearly 50 million packages from the sortation centers this year.
We expect these efforts to drive the company’s online sales via speedy deliveries and boost the supply-chain network. During third-quarter fiscal 2022, comparable store sales grew 3.2%, while comparable digital sales increased 0.3%. Same-day services led digital growth, most notably through drive-up service, which delivered high single-digit growth.
What Else Should You Know
Target has been deploying resources to enhance its omnichannel capabilities, add new brands and boost same-day delivery options to offer customers a seamless shopping experience. Management has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape.
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We note that Target has been directing resources toward expanding digital and omnichannel capabilities. The company has been ramping up its digital solutions and strengthening delivery capabilities to make shopping more seamless. Its services like doorstep delivery, curbside pickup or buy online and pick up at store, have been playing a crucial role in serving consumers better.
The company’s stores, fulfillment centers, flow centers, sortation centers and Shipt, have helped Target ramp up same-day services and augment digital growth. The company has introduced additional features and functionalities to make deliveries and pickups more convenient for consumers.
Target also continues to emphasize on developing flexible-format stores to penetrate deeper into urban and suburban areas. Given the changing business scenario and rising competition, the company is focused on stores of various sizes and formats to better serve customers. This approach helps the company augment sales and overall profitability.
Over the past three months, shares of this currently Zacks Rank #3 (Hold) player have gained 1.4%, while the industry has declined 4%.
3 Key Stocks for You
We have highlighted three top-ranked stocks, namely Abercrombie & Fitch ANF, American Eagle Outfitters AEO and Boot Barn BOOT.
Abercrombie & Fitch, a leading casual apparel retailer currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 0.5% and 526.3%, respectively, from the year-ago reported figures. ANF delivered an earnings surprise of 107.7% in the last reported quarter.
American Eagle Outfitters, a casual apparel, accessories and footwear retailer, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 82.6% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 3.3% and 24.2%, respectively, from the year-ago reported figures.
Boot Barn, a fashion retailer of apparel and accessories, currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 8.2% and 9.1%, respectively, from the year-ago reported figures.
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Target Corporation (TGT) : Free Stock Analysis Report
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