From impetus to implementation
In 40 years in business, I’ve never seen a better blend between a
team’s aspirations and the capabilities needed to bring them to life.
As recently as 2017, the main potential for Target lay in our purpose:
to help all families discover the joy of everyday life. Back then, we
didn’t have the tools to perform consistently on the level and scale we
envisioned. Now we do, and the results are unmistakable.
At a time when so much in the world around us has been out of our
control, staying focused on families—on delivering small doses of
everyday joy, on providing both the items families need and those they
want—has contributed something distinctive for the millions of people
we serve. It has also sparked exceptional business performance.
In 2021, we grew comparable sales by 12.7%, on top of record growth
in 2020. Our digital growth continued to outpace the industry, driven
by our unique ability to fulfill more than 95% of all sales, physical and
digital, from our stores. And we solidified the huge market-share gains
we saw in 2020 across our core merchandising categories.
Virtually all of that growth was driven by traffic gains, which means that
week after week, more guests keep turning to Target.
Strategic not cyclical
Our record growth of 2020 and our additional expansion of 2021 were
enabled by investments we’d made in a unified set of initiatives intended
to drive growth over long time horizons.
But even as we celebrate extraordinary near-term progress, we remain
much closer to the start of our growth than the end of it.
What’s happening in our stores offers an illustration and proof that
we’re just getting started.
We have locations that grew from $40 million in sales to $50 million or
$60 million in the last couple of years, not all of which have received our
key long-term growth drivers.
Only about half of our nearly 2,000 stores have been touched by our
extensive remodel program. In the years ahead, about 200 more per
year will be remodeled, will be optimized for same-day services like
Order Pickup and Drive Up, will receive highly popular and productive
additions like Ulta Beauty, Disney, Apple or Levi’s, or updated and
expanded grocery space.
At the same time, we’ll open about 30 new stores per year, in a broader
range of locations, serving a more diverse guest base than ever.
And we’ll add significant new supply chain capacity and infrastructure
in markets across America.
We’ll also continue to invest heavily in our global team, now more than
400,000 strong, knowing they are absolutely essential to our recent and
long-term success. In 2021, investments included our industry-leading
tuition-reimbursement benefit, our evolved staffing model meant to
provide more stable hours and paychecks for our team, and ongoing
pandemic support such as vulnerable leave, vaccination pay and
frontline bonuses. Earlier this year, we announced another large
investment of up to $300 million to set a new starting wage range of
$15 to $24 per hour and to expand access to our healthcare benefits
for more team members and their families.
This is very much in keeping with a principle we articulated to an
audience of investors earlier this year: that caring for and investing
in our team is the best long-term investment we can make in
Performance points to greater potential
Whereas five years ago we saw enormous potential in our purpose, we
now have the performance to back it up—and that performance points
to even greater potential.
We expect investments like the ones I’ve mentioned here to keep
us growing faster than the market for years to come. To drive
mid-single-digit growth in total revenue and operating income, and
high-single-digit growth in adjusted earnings per share. We’ve also
raised our expectations for after-tax return on invested capital, to the
high 20% to 30% range, a level that puts us in rare air among our
In closing, I’ll say that no one understands better than our team how
much potential is in front of us. When I reflect on how we’ve pulled
together through adversity, and how we’re more tightly connected than
ever through our culture, I can’t think of a team that is better suited to
take care of our guests and communities, at a time when taking care
seems like the most important thing of all.
We’ve shown that we have the values to meet this moment, as well as
the resources, the momentum, the size, scale and unified ambition to
do so. And that is why I’m convinced that Target will continue to deliver
tremendous value for shareholders and all stakeholders for many
years to come.
Chairman and CEO
References to expected future financial performance are forward looking statements that are subject to risks and uncertainties, including those described in the Risk Factors section of this Annual Report.