Target (TGT) Gains Market Share on Operational Strength

Target Corporation TGT, one of the widely recognized names in the Retail – Discount Stores industry, has been making tactical changes to its business operations to adapt and stay relevant in the competitive retail landscape. This Minneapolis, MN-based company has been making concerted efforts to enhance shopping methods and techniques, be it in-store or online.

The company has been making investments to scale up fulfillment services and improve its supply chain capabilities. Last month, management unveiled plans to invest up to $5 billion to keep scaling its operations through 2022. The company will invest in enhancing digital experiences, physical stores, fulfillment capabilities and supply chain capacity to accelerate growth.

Let’s Delve Deeper

Evidently, Target has been ramping up its digital solutions and strengthening delivery capabilities to make shopping more seamless. The company’s delivery services like doorstep delivery, curbside pickup or buy online and pick up at store, have been playing a crucial role in serving consumers better.

The company has introduced additional features and functionalities to make deliveries and pickups more convenient for consumers. These include ‘Shopping Partner’, increasing the number of Drive-Up spots and enhancing same-day delivery with Shipt and more.

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Undoubtedly, a coordinated operation of stores, fulfillment centers, flow centers, sortation centers and Shipt has helped Target in ramping up same-day services and augmenting digital growth. Target plans to open nearly 30 stores and remodel about 200 stores in fiscal 2022. To add speed, efficiency and capacity to its fulfillment operation, Target continues to invest in sortation centers.

Well, consumers have been opting for Target for its multi-category assortment of owned and national brands, reasonable pricing, and accessibility. Thanks to deep customer engagement and higher service levels, Target has become an attractive partner for popular and high-profile brands like Apple, Disney, Ulta Beauty and Levi's. After the success of the first 100 Ulta Beauty at Target stores, the company plans to add more than 250 new Ulta Beauty shop-in-shops in fiscal 2022. Target expects to open at least 800 such ULTA locations in the coming years.

Wrapping Up

Over time, Target has emerged as a favorite destination for shoppers, be it for essentials or discretionary purchases. The company’s business model has helped gain consumers’ wallet share and contributed to top-line growth.

We believe Target’s well-chalked assortments, refurbished stores and growing digital capacity are likely to keep it in good stead in the days ahead. Shares of this Zacks Rank #2 (Buy) company have rallied 18.7% in the past year compared with the industry’s growth of 21.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 More Stocks Looking Red Hot

Here we have highlighted three other top-ranked stocks, namely, Costco COST, Kroger KR and Sprouts Farmers SFM.

Costco, which operates membership warehouses, carries a Zacks Rank of 2 at present. COST has a trailing four-quarter earnings surprise of 13.3%, on average.

The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 13.5% and 17.6%, respectively, from the corresponding year-ago period’s actuals. COST has an expected EPS growth rate of 9.1% for three-five years.

Kroger, the renowned grocery retailer, carries a Zacks Rank #2 at present. The company has an expected EPS growth rate of 9.9% for three-five years.

The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 2.4% and 1.9%, respectively, from the year-ago reported numbers. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

Sprouts Farmers offering fresh, natural and organic food products currently carries a Zacks Rank of 2. SFM has an expected EPS growth rate of 7.3% for three-five years.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and EPS suggests growth of 4.5% and 6.2%, respectively, from the corresponding year-ago period’s readings. SFM has a trailing four-quarter earnings surprise of 17.9%, on average.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.