Target is adjusting its plans for new store openings and remodeling to account for the changes the coronavirus has wrought on retail operations.
Rather than remodeling around 300 stores in 2020 as it had previously planned, the company instead expects to remodel approximately 130. All projects currently underway will be completed while all others will be moved into 2021.
Likewise, it’s downgraded the number of new small-format stores it will open in 2020 to 15 to 20, down from the originally expected 36.
Target also put its plans to add fresh grocery and alcohol to its drive-up and pick-up services on hold.
All of these changes are being done to support the company’s associates and minimize disruptions during this unexpectedly busy time. It saw comp-sales increase 3.8% for the month of February, while month-to-date March comp sales are over 20% higher than the prior year period.
However, the retailer warned that continued sales declines in higher-margin discretionary categories could result in lower-than-expected gross margin dollar performance, while costs related to such things as increased pay and benefits, store cleaning, and a spike in merchandise volume and the supply chain will be higher than previously expected.
These changes are expected to add over $300 million to Target’s prior outlook for the quarter. Given the uncertainty surrounding the current retail environment, the company withdrew its prior guidance for the period and full-year 2020.
“We are prioritizing the work that’s in front of us to support our team, store operations and supply chain as families across the country rely on Target for everything they need in this challenging environment,” said Brian Cornell, Target chairman and CEO. “I want to thank our entire team for their efforts, which have been nothing short of heroic. Over the past few weeks we’ve experienced an unprecedented surge in traffic and sales, as guests rely on our stores and same-day services. Ensuring we can take care of our team and deliver for the millions of guests who are counting on us remains our top priority.”
Although Target is putting the expansion of its curbside and pickup services on hold, its earlier focus on these initiatives have likely proved to be especially beneficial during this period of social distancing. The company said earlier this year that fulfilling orders this way is 90% cheaper than shipping from a warehouse.
Target grew order pickup by nearly 50% last year, while the Drive Up service grew 750%. It now offers order pickup in all of its 1,870 stores, with Drive Up available at 1,750 stores.