To Support Sales Growth, Target Says It’s ‘Leaning Into’ Property Investments Article originally posted on CoStar on August 18, 2021 Retailer May Hit $100 Billion in Annual Sales as It Spends on Store Renovation Target Corp. executives said the company might reach annual sales of $100 billion for the first time in its history, and the chain plans to spend some of that windfall on its property. To keep gaining ground, CEO Brian Cornell said Target is going to put money into its bricks-and-mortar stores in the form of renovations. “Even after unprecedented growth over the last two years, we see much more opportunity ahead of us, and we’re leaning into opportunities to invest in the long-term growth and resiliency of our business,” he said. In this respect, Target’s properties team has already had a very busy year. Chief Operating Officer John Mulligan, who predicted the company could hit $100 billion in sales, told analysts the chain “ramped up” a long-standing program to remodel the company’s existing 1900 stores and is on track to complete 140 in 2021 and “an even higher number” in 2022. He added that the team is also planning new stores and beefing up its logistics operations with new distribution facilities and centers for order sorting. Target is ranked the eighth-largest U.S. retailer in terms of sales, and executives say the chain has to invest to move up in a category in which analysts say Walmart and Amazon may be going back and forth in the lead position. Executives said the total amount Target is investing in real estate and construction is about $1.3 billion for 2021 so far and will probably come in a little lower than predicted for 2021, at around $3.5 billion in all rather than a full $4 billion. However, executives expect the company to spend more in 2022, with a tentative capital budget in the $4 billion to $5 billion range. The company said it’s maintaining and even adding to the sales and market share gains made during the pandemic, when the retailer saw triple-digit increases in digital orders. “Our theme for this quarter was growth on top of growth,” Cornell said when discussing the company’s results for the second quarter of 2021. “You should expect that theme to continue going forward.” Michael Fiddelke, chief financial officer of Target, added that he’d “never experienced a time like this” during his 17-year tenure at the company. “Typically in retail, if you saw a large, mature company like ours, growing at the rate we’re seeing today, you’d assume we were comping over soft numbers from the prior year,” Fiddelke told analysts on the call. “Instead, we’re comping over a year of record growth in 2020, on both the top and bottom lines.” Nevertheless, the Minneapolis-based retailer’s growth was sedate when compared to 2020 and Target executives said the company will have to add that capacity to continue on an upward trajectory. Cornell said Target has “only begun to scratch the surface of what’s possible.