Two years ago, we laid out an ambitious investment agenda to transform our company – by reimagining our stores, reinventing our supply chain and fulfillment capabilities, repositioning our owned brand portfolio and investing in our team. And as I look back on our performance in 2018, I could not be more proud of all that our team accomplished.

In 2018, comparable sales rose an industry-leading 5 percent, driven entirely by growth in traffic. We gained market share in every major category. And we established a record high for our earnings per share.

Today, I can say with great confidence that the strategy we laid out two years ago is working. Our guests love what they see. And in this intensely competitive landscape, Target is right where we want to be: among the top performers in the industry.

But, anyone who follows retail knows that we operate in an incredibly dynamic marketplace. So if we want to stay on top as a brand our guests love, shop and admire, we know we have more work to do. Rest assured, our team understands that better than anyone. Our goal isn’t to deliver only incremental gains or to string together a couple of strong quarters. Our goal is to build a better company, powered by a durable and defensible business model that delivers strong, profitable growth for years to come.

As we look to the future, that means you can expect Target to keep investing and growing.

Last year, we said we wanted to become America’s easiest place to shop. And our team delivered, as Target became the first retailer to offer same-day and Drive Up fulfillment capabilities coast-to-coast. In the year ahead, we’ll continue to invest and expand our network, focusing on elevating our service experience and driving greater adoption among our guests.

In the last two years, we remodeled more than 400 stores, and we’re on track to deliver 600 additional remodels by the end of 2020. And, we’re still thoughtfully adding to our store footprint. In 2018, we opened more than two dozen small-format stores. This year, we’re planning to add nearly 30 more – zeroing in on high-traffic urban locations and college campuses.

Last year, we undertook an ambitious redesign of our stores-operating model – redefining thousands of roles to deliver better guest service. We raised our minimum wage for U.S. team members to $12 an hour. And we raised it again in early 2019 – to $13 – as we move toward our commitment to a minimum $15 an hour by the end of 2020.

Digital channels continue to play a key role in our overall sales growth. In 2018, comparable digital sales grew 36 percent, capping the fifth-straight year in which our digital growth has topped 25 percent. Today, Target’s digital performance is delivering more than $5 billion in annual sales – and driving additional growth across the business. In the year ahead, you can expect that we’ll keep investing in digital capabilities – from artificial intelligence to virtual reality – that will elevate the shopping experience and give our guests new reasons to choose Target.

Finally, when we introduced our investment agenda at the beginning of 2017, we said we’d deliver more than a dozen new brands in 18 months. As of today, we’ve more than doubled that number, and our team is still going strong. Recently, Fast Company named Target one of the world’s most innovative companies, specifically for our brand work. In 2019, Target will deliver a steady stream of newness and exclusives across our assortment as we continue to launch brands and introduce new partnerships.

Taken together, we expect these initiatives will power a financial model that is designed to consistently generate low-single digit sales growth, mid-single digit growth in operating income, and high-single digit growth in earnings per share. This financial model is also designed to generate strong cash flow and return on invested capital that will not only sustain, but fuel our performance in the years ahead.

So as we move into 2019, we aren’t slowing down our efforts to adapt, create, innovate and inspire. I want to thank our teams in stores and property management, in merchandising, in supply chain, in marketing and communications; our product designers and sourcing experts; our data scientists, digital and technology teams; our teams in finance, strategy, legal and HR – everyone across Target. This is the team that will continue serving our guests, creating value for our shareholders and leading this industry for many years to come.

Brian Cornell
Chairman and CEO