Target’s Revenue Is Rising At Records Rates
Target thinks it can keep a good thing going after it saw its sales spike to previously unseen heights.
This article is more than 2 years old
Retail giant Target has made the news as of late for its efforts to expand upon the curbside pickup options that it offers to its consumers. Target also announced its intentions to increase its retail workers’ base pay to $24/hour in some markets. Continuing with their newsworthy trend, CNBC reported that Target’s profits are rising at record rates and that the company is confident they can not only keep their stellar performance going, but further improve upon it.
Amid unprecedented inflation and still sustaining supply chain gaps Target saw its revenue skyrocket by 9% in the fourth quarter of 2021. Target’s revenue is a good indication of how, similar to other retailers, consumers remained spending-driven even during this historical inflationary period. To put it into perspective, data collected by CNBC revealed that the amount of money Target has brought in annually is currently sitting at $106 billion. That $106 billion is 36% greater than what the company saw pre-pandemic. This immense gain in profits has caused Target’s stock market value to climb by 84%.
Target thinks that its increased sales are a symptom of shifting and evolving consumer perspectives. CEO Brian Cornell said examining the top-selling products at present revealed that customers are spending their hard-earned cash on supplies for travel like luggage and bathing suits. What Cornell is suggesting by relaying this information, essentially, is that being stuck indoors for two long years is propelling consumers to spend more on themselves and start experiencing the pleasures of what they once took for granted again. “They’re watching and looking for value right now, but they’re also looking for newness and experience,” Cornell pointed out.
Cornell’s positive thinking and confidence that the profits that Target brings in will continue to surpass expectations is likely to be communicated at the retail titan’s upcoming annual investor meeting. Still, despite all the successes Target has to report on, it doesn’t mean that they will not be faced with roadblocks in their efforts to keep a good thing going and continue to bolster company sales growth. Simply put, just because Target believes it can predict customer spending to some degree of accuracy, doesn’t mean that those predictions will actually come to pass. Especially considering that inflation is causing costs to rise at every market level.
However, it’s also important to realize that the steps Target took to diversify itself during the pandemic will likely help to fuel their expectations of achieving continuous soaring sales. For instance, Target’s home delivery subsidiary Shipt has served to enhance the chain’s overall revenue gains in big ways. Shipt sales alone grew by an impressive 45% in the fiscal year 2021. The total increase in Shipt sales followed an eye-popping growth metric of 235% that the Target affiliate achieved back in 2020.
All in all, Target is banking on the strategies that have worked for them over these past two pandemic-laden years to continue to propel them into a sustained future of high profitability. Ultimately though, it is up to the consumer to prove whether or not Target’s profit predictions will indeed become a reality.
