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Target CEO: Earnings prove strategy is working; fulfillment is our friend

Target CEO Brian Cornell said investments over the past two years are paying off, new small formats are being well received and its fulfillment approach is connecting with the consumer.

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March 5, 2019 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com

Target CEO Brian Cornell doesn't take victory laps but he's not being shy when it comes to acknowledging Target's investment strategies are paying off and that his company is on track to make Target "America's easiest place to shop."

That's what he shared with CNBC Tuesday following Target's latest earnings. The retailer saw its best full-year sales comp sales growth in more than a decade, with fourth quarter comparable sales increasing 5.3 percent on traffic growth of 4.5 percent. Comparable digital sales grew 31 percent, according to a press release.

The financial report, Cornell said, is "proof" that Target's long-term strategy is working and "the guest is responding well." That positive response is related to expanded fulfillment options, the advent of a smaller footprint store and investment in Target's brands, said the CEO.

"But I think importantly the investments we made in fulfillment are connecting with the consumer. They're taking advantage of ordering online and picking up in store. They're driving into our parking lots. There are ship shoppers now taking advantage of same-day delivery. So, all of those elements are coming together," he told CNBC.

Cornell expects the positive progress to continue throughout 2019 with low single digit comps, margin stability and operating income growth in the mid-single digits.

"So all the key measures are coming together. It's taken some time but those investments we made are now delivering really good returns for our investors," he told CNBC, adding "both parts of our business [in-store and digital] are performing well."

The CEO views retail as a "very stable consumer environment," with strong consumer confidence in play.

“Right now I think we're seeing a pretty consistent consumer environment. And that's certainly showed up in our January results."

Target, Cornell told CNBC, will continue its store investments and remodeling over 300 locations as well as launching small format stores on campuses and in urban centers. The big focus on fulfillment, he made clear, will continue as Target views full fulfillment "as our friend."

"The investments we're making in drive-up and pick-up. One, the consumer really prefers that. It's really reliable. It's easy. It's convenient. And it's more profitable for us. So that's really going to help our margins going forward," he told CNBC.

"So no major changes. We'll continue to execute our plans, continue to scale and build a very durable financial model that's going to be sustainable for years to come."

About Judy Mottl

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Judy Mottl is editor of Retail Customer Experience and Digital Signage Today. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.

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