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Target (TGT) to Invest $5B, Plans to Add More Ulta locations

Target Corporation TGT has been making strategic investments to improve performance as well as adapt and stay relevant in the ever-evolving retail landscape. The company has been deploying resources to enhance omni-channel capabilities and adopt strategies to provide a seamless shopping experience.

This Minneapolis, MN-based company is committed to building its core capabilities to accelerate long-term growth and drive deeper customer engagement. The big-box retailer unveiled plans to invest up to $5 billion to keep scaling operations through 2022. The company will invest in enhancing digital experiences, physical stores, fulfillment capabilities and supply chain capacity to accelerate growth.

Let’s delve deeper.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Driving Digital Advancement

Target has been investing in technology to grow its digital capabilities. The company’s investments in Roundel are optimizing advertisement placements on Target.com to provide a more personalized guest experience and create value for the partners. In fact, Roundel generated more than $1 billion in value for 2021. Management expects the figure to grow over $2 billion in the coming years. With the ongoing technology enhancements this year, customers can buy Supplemental Nutrition Assistance Program (SNAP)-eligible groceries on Target.com. Consumers can also utilize Target’s free, same-day services Drive Up and Order Pickup for such orders.

Store Expansions & Remodeling

Target envisions opening nearly 30 stores in 2022 to reach a wider population. Management plans to open stores ranging from mid-size locations to small-format stores. The company unveiled plans to add over 250 new Ulta Beauty Inc. ULTA shop-in-shops at Target by the end of this year, after opening 100 locations in 2021. Target envisions opening at least 800 such ULTA locations in the coming years.

Target is on track with its remodel program and plans to remodel about 200 stores. Apart from the full-store remodels, the company is focused on undertaking smaller projects across the chain to aid fulfillment services and expand in-store brand partnerships.

Boosting Fulfillment Capabilities

Target’s same-day fulfillment services have gained immense traction over the years and contributed significantly to its digital growth. Its same-day delivery provides a convenient shopping experience for the shopper. Keeping along these lines, the company plans to keep growing its same-day offering by adding Starbucks orders and easy returns to its Drive Up service in select stores.

Target is persistently investing in its sortation centers to add speed and efficiency to its fulfillment operation. In 2021, the company added two new distribution facilities to support higher inventory flow to the stores. Also, Target is presently developing four facilities to widen the supply chain capacity.

Wrapping Up

Thanks to its one-stop shopping destination, consumers have been opting Target for its multi-category assortment of owned and exclusive brands as well as popular national brands.The Zacks Rank #3 (Hold) company’s well-chalked assortments, refurbished stores and growing digital capacity steered by an effective workforce are likely to keep it in good shape in the forthcoming periods.

We note that Target’s shares have increased 32.4% in the past year compared with the industry’s rise of 27.6%. Ulta Beauty’s stock has gained 17.6% during this time.

2 Retail Stocks to Bet on

Here are some better-ranked stocks — Dollar Tree DLTR and Capri Holdings CPRI.

Dollar Tree, the operator of discount variety retail stores, holds a Zacks Rank of 2 (Buy) at present. DLTR has a trailing four-quarter earnings surprise of 8.8%, on average. DLTR has expected earnings per share (EPS) growth rate of 12.2% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for DLTR’s current financial-year sales suggests growth of 3.4% from the year-ago period’s reported figure.

Capri Holdings, which offers accessories and footwear, carries a Zacks Rank #2 (Strong Buy) at present. The company has a significant trailing four-quarter earnings surprise, on average. CPRI has an expected EPS growth rate of 30.9% for three to five years.

The Zacks Consensus Estimate for Capri Holdings’ current financial-year sales suggests growth of 37.1% from the year-ago period.

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Target Corporation (TGT) : Free Stock Analysis Report

Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report

Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report

Capri Holdings Limited (CPRI) : Free Stock Analysis Report

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Zacks Investment Research