Subscribe Login
DE4CC0DE-5FC3-4494-BCBF-4D50B00366B5
Coronavirus

Target Withdraws Forecasts, Curbs Spending To Meet Virus-Related Demand

Target Corp has withdrawn its financial outlook and said it would scale back on planned investments to focus on meeting surging demand as Americans stock up on essentials and stay home to slow the spread of the coronavirus outbreak.

The big-box retailer said it now plans to remodel only about 130 stores in 2020, down from 300, moving the rest of the projects to 2021. Target added it would open fewer small format stores than it had previously planned.

Increased Discipline

"It's become very clear that we need to be disciplined about making sure our stores and supply chain is focused on serving our guests without any unnecessary distractions," chief executive Brian Cornell said.

"We'll need to prioritise the flow of food, medicine and other essentials for the foreseeable future."

In the past few weeks, consumers have been flocking to stores to load up on canned food, disinfectants, toilet paper and other essentials as the pandemic keeps Americans confined to their homes, forcing retailers including Target to put limits on the number of items that can be bought in one shopping trip.

Cornell said demand has been "unprecedented," likening the buying behaviour to levels occasionally seen during natural disasters.

2020 Programme

Target had laid out its full-year, first-quarter forecasts and investment plans for 2020 just three weeks earlier and last year announced a new share repurchase program of $5 billion. The buyback has now been suspended.

Till date in March, overall same-store sales at Target was up more than 20% from a year earlier, with sales of essentials, food and beverage up more than 50%.

The company also expects higher-than-anticipated costs, driven by an increase in pay and benefits for frontline workers, and for maintaining essential inventory.

Supporting Employees

Target, like many other retailers, has reduced store hours for cleaning and restocking and said last week it would raise the minimum wage by $2 an hour for store and distribution centre workers through May 2.

Rivals such as Amazon.com Inc and Walmart Inc have also boosted pay and gone on a hiring spree to manage a surge in orders.

The virus, which has infected more than 44,000 people in the United States leading to more than 500 deaths, has resulted in the closure of several businesses and raised concerns of a global recession.

"There is no playbook for how to react in this environment. We're writing the script each and every day," Cornell said.

News by ReutersClick subscribe to sign up to ESM: European Supermarket Magazine.

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our Terms & Conditions and Privacy Policy
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days