Dani James
12 min read
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This story was originally published on Retail Dive. To receive daily news and insights, subscribe to our free daily Retail Dive newsletter.
It’s been a tough few months for Target.
Or at least that's how CEO Brian Cornell described it in an email to employees in early May. In the email, which Target shared with Retail Dive, Cornell recognized that silence from leadership had “created uncertainty,” but added reassurance that “we are still the Target you know and believe in—a company that welcomes all and aims to bring joy to everyone, every day.”
But is it? Some consumers aren’t so sure anymore and analysts would argue that Target’s tough period started far before this year.
Target is not standing still in the face of its challenges. The retailer announced a slew of new brands or offerings over the past few months, met with some well-known activists to discuss its DEI changes, launched a strategic refocusing initiative and switched up its executive team.
Still, analysts seem doubtful of how quickly the business can be turned around. Plus, the work comes at the same time as major changes in U.S. trade policy that have upended retail planning and inserted more uncertainty into the industry.
Target has a plan. But is it too little, too late?
The company has certainly earned its keep as one of the nation’s most successful retailers in the past few decades. In tough times, it thrived. Target in 2020 recorded $15 billion of sales growth, which was higher than its total sales growth over the previous 11 years, thanks in part to staying open for wary shoppers looking to consolidate purchases.
The retailer was thriving compared to others in apparel at the time, a category (along with home goods) where Target had invested heavily in private labels in the years prior. At the same time, Target was undergoing large-scale store revamps, investing in digital capabilities such as drive-up delivery and creating new shopping experiences like Ulta Beauty at Target.
From 2019 to 2020, Target saw its full-year sales increase nearly 20% year over year, along with a 19.8% increase in total revenue and a 40% jump in operating income. Cornell attributed much of this success to the company’s multicategory assortment mix and its various fulfillment options. For 2021, the retailer reported double-digit growth in all the same metrics.
By 2022, though, Target’s growth was slowing. And now, the company is facing not just sales declines, but also consumer backlash, a temporary pause on its Ulta shop-in-shops and a poorly positioned assortment for the current macroenvironment. Its Q1 earnings this month were a disappointment, and while that’s partly due to tariffs and consumer backlash, it’s also the result of longstanding issues.
