7 hours ago | By WGSN Insider
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Mar 04, 2015
Target Corp on Tuesday announced its promised longer-term vision and, as expected, it was a bitter sweet outlook. First the tough news. The US value retail giant is to cut several thousand mostly-HQ jobs as part of a restructuring that will cut $2bn in costs over two years.
Positive news came with its plans to invest $2bn-$2.2bn in capital expenditures for the current fiscal year with about half to be spent on tech, vastly improving its online capabilities with Target determined not to miss the boat on the explosion of smartphone-based commerce. It also forecast a rise in profit and sales this fiscal year (more of that later).
The new e-commerce focus will help spur Target’s online sales growth of 40% as well as help fuel total projected sales growth of 2-3% this year.
CEO Brian Cornell said Tuesday the restructuring was aimed at freeing up resources for investments in its focus areas. “Cutting complexity at headquarters will make us more competitive,” he said, while noting Target will also establish centralised teams based on specialised expertise.
In real terms Target wants to be better able to compete in an increasingly competitive market and appeal to shoppers who are buying and researching on their mobile devices. “We have to be more nimble, more agile. We have to create a more innovative culture,” Cornell said.
However, he cautioned analysts and investors that the overall transformation will take time. “It’s not going to happen overnight,” he said.
Target meanwhile unveiled forecasts for the fiscal year to January 2016 and expects adjusted EPS, which excludes data breach costs and other expenses, of $4.45-$4.65 compared with last year’s $4.27. Analysts were expecting $4.51. Same-store sales are expected to grow 1.5-2.5% for the year.
The company also said it had the capacity to buy back up to $2bn worth of its own shares this fiscal year, and look to repurchase $3bn annually from the following year and beyond.
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