Target 2021 Q4 Earnings Roundup Highlights Continued Focus on Teams, Stores as Hubs and Merchandise
Target 2021 Q4 Earnings Roundup Highlights Continued Focus on Teams, Stores as Hubs and Merchandise
Overall, Target continues to go from strength to strength.
backward-looking:
* Went from $70B in sales in 2017 to $106B today.
* 19 consecutive quarters of comp store sales growth
* Digital sales now 21% penetration
* Q4 comp sales 8.9% y/y, 2021 full year 12.7%
forward-looking:
* Annual Capex expected to be $4-5B going forward.
* After-tax return on invested capital should be consistent ~30% going forward, compared to 15-17% prior to the pandemic. best in industry.
* slightly increased markdown rates expected in 2022
* similar guidance to walmart, slower in first half, accelerated second half.
* operating margins should be ~8%
Teams
* Investing $300M in employees to set a new starting wage between $15 and $24.
* Expanded and earlier access to healthcare benefits, even for hourly employees.
* Goal is to be wage leader in every market.
Stores as Hubs aka #SupplyChain
* 45% growth in same day services
* Opened 32 new stores in 2021. 30 more to come in 2022.
* Shipping from Store saves 40% per unit fulfillment costs compared to upstream shipping.
* Average per unit digital fulfillment costs decline more than 50% in last few years. same-day service penetration CANNOT be compared apples to apples across retailers like #Walmart, #Macys, etc. Target is just plain better at it.
Merchandise
* Owned brands now 28% of sales. Growing 18%, faster than rest of business. Q4 produced $30B in owned brands revenue.
Growth should be driven by a few areas:
1 - Better merchandise mix + new brands: mix of owned + national partnerships.
2 - New stores plus store remodels which greatly improve guest experience.
3 - Improved operating margins due to greater store productivity and fulfillment efficiency upstream and downstream of stores.
4 - Superior staff retention compared to competition, enabling better service.
