Target said Wednesday it plans to invest $5 billion across stores next year in an effort to win back customers as the retail giant reported its 12th-straight month of weak or falling sales.
Same-store sales fell 2.7% in the three months ended Nov. 1.
Customers visited Target less often and spent less while they were there, with foot traffic plunging 2.2% and average transactions falling 0.5% from the previous year.
Shares in Target fell 0.9% Wednesday. The stock is down 36% so far this year.
“Mission 1 through 10 is to get back to growth for us,” incoming CEO Michael Fiddelke said on a call with reporters, after declining to answer when he thinks sales will turn positive again.
He announced the retailer will put an additional $1 billion toward improving the store experience, bringing its total investment for next year to $5 billion – a 25% yearly jump in capital expenditures.
Fiddelke warned that consumers – fearful of inflation and economic uncertainty – have pulled back on spending, especially on discretionary items like home decor and apparel.
Target has struggled to keep up with rivals like Walmart and fast-fashion firms Shein and Temu, which offer lower prices.
The government shutdown, which ended last week after a record-breaking 44 days, and the related pause in SNAP benefits also added to volatility in the most recent quarter, Fiddelke said.
Some outraged customers also boycotted Target this year after it slashed its DEI initiatives. In May, Target said the boycott was partly to blame for its weak sales.
On Wednesday, the retailer cut its full-year profit forecast to between $7 and $8 a share, down from $7 to $9.
It maintained its sales forecast for the holiday season, expecting a low single-digit decline.
In the third quarter, net sales plunged 1.5% on a yearly basis, down to $25.3 billion.
Net income dropped 19% to $689 million.
Excluding one-time costs like severance packages, Target reported adjusted earnings per share of $1.78.
Revenue dropped to $25.27 billion, down from $25.67 billion in the same period last year.
Last month, the retailer slashed 1,800 jobs, or roughly 8% of its corporate workforce – its largest layoff in a decade.
The company is looking to turn things around by giving its stores a make-over, addressing customer complaints about messy locations, empty shelves and difficulty getting help from workers.
Target has already tweaked its online order fulfillment system so more employees are free to stock shelves and help customers.
The retailer has also sent its designers to rodeos and ski lodges, hoping they will find inspiration to juice up Target’s merchandise lines.
Just last week, the retailer lowered prices on 3,000 everyday items, including food and household products.
It also set the price of some holiday merchandise to feel like bargains, including $1 ornaments, $5 candles and $10 throw blankets, according to Chief Commercial Officer Rick Gomez.
The company has ramped up its holiday assortment to include 20,000 new items – more than double last year’s collection. Over half of those products are exclusive to Target, which it is hoping will boost sales.
Target also partnered with Starbucks on a store-exclusive frozen peppermint hot chocolate drink, described as “a creme Frappuccino with a blend of mocha sauce, milk and ice, poured over a layer of peppermint-flavored whipped cream and red and green sprinkles.”
Still, Target is anticipating customers will continue making trade-offs during the holiday season.
Around Halloween, shoppers bought candy and costumes, but they pulled back on seasonal decor, Gomez said.
Consumers will likely do the same over the winter, giving priority to “what goes under the tree versus what goes on the tree,” he added.
Target also recently announced a deal with OpenAI allowing shoppers to browse Target products and add them to shopping carts directly within the ChatGPT app.
The retailer announced in August that Fiddelke, currently Target’s chief operating officer, would take the helm as CEO on Feb. 1, succeeding Brian Cornell.
This story originally appeared on NYPost
