Business

Kohl’s sales for the holiday quarter came in well below Wall Street’s estimates.
The retailer has been under intense pressure from activist investors.

People shop at Kohl’s department store amid the coronavirus outbreak on September 5, 2020 in San Francisco, California.
Liu Guanguan | China News Service | Getty Images

Kohl’s shares sunk on Wednesday after the retailer posted a big loss and a sales decline of about 7% in the holiday quarter.
Here’s how the retailer did for the quarter that ended Jan. 28 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Loss per share: $2.49 vs. expected earnings of 98 cents a share
Revenue: $5.78 billion vs. $5.99 billion

Kohl’s also shared a weak outlook for the year ahead. It said it anticipates net sales to range between a decline of 2% and a decline of 4%, including the impact of the 53rd week of the year that is worth about 1% year over year. It said it expects diluted earnings per share to range from $2.10 to $2.70, excluding non-recurring charges.
Tom Kingsbury, the company’s newly named CEO, attributed the retailer’s disappointing results to “the ongoing persistent inflationary environment.”
Yet he said the company is taking steps to “better position the business for 2023.”
“I am confident that our efforts will drive improved, and more consistent, sales and earnings performance over the long-term,” he said in a news release.
Kohl’s has dealt with activist pressure, leadership changes and a more challenging economic backdrop.

Then-CEO Michelle Gass announced in November that she was leaving to become president and CEO-in-training at Levi Strauss & Co. Her departure came after Ancora Holdings and Macellum Advisors questioned Kohl’s turnaround strategy, pushed for improvement to its sales trends and called for new leadership.
Pressure from those investors gained momentum after Kohl’s ended talks this summer to sell to the Franchise Group, owner of The Vitamin Shoppe.
Kohl’s announced last month that Kingsbury, who served as interim CEO, would step into the position permanently. He is the former CEO of Burlington Stores. It said at the time that it had reached a cooperative agreement with Macellum Advisors, as it named Kingsbury to the role.
Kohl’s had declined to provide a holiday-quarter outlook and pulled its full-year guidance in November, saying inflation had hurt consumer spending and made future sales patterns hard to predict.
As of Tuesday’s close, Kohl’s stock is up about 11% this year, outperforming the approximately 3% gain of the S&P 500. Shares closed at $28.04, bringing the company’s market value to nearly $3.1 billion.
This story is developing. Please check back for updates.

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Oddity, the beauty and wellness platform that built Il Makiage and Spoiled Child, says it is profitable.
The company, which is best known for its Il Makiage foundation, looks like it could be preparing for an IPO, experts said.
Oddity is seeking to disrupt the legacy beauty and wellness market by replacing the in-store experience with product recommendations driven by artificial intelligence and data. 

Oddity Il Makiage
Coutesy: Oddity

Oddity — the direct-to-consumer beauty and wellness platform known for its ubiquitous Il Makiage social media ads — is making money and growing in an environment that’s increasingly risky for purely digital retailers. 
The Tel Aviv-founded company looks like it could even be preparing for an initial public offering, despite rising uncertainty in markets and the economy, experts told CNBC. 

Oddity, which is home to the Il Makiage makeup line, the Spoiled Child skin and hair care brand, and a third brand that’s in the works, declined to say whether it’s planning to go public but did reveal some of its financial metrics with CNBC. 
Since its U.S. launch in 2018, Oddity has achieved profitability, the company said, making $380 million in gross sales in 2022. On average, its gross sales have doubled each year since 2018, the company added.
In Spoiled Child’s first year on the market, the new brand brought in $48 million in gross sales. Oddity declined to share its return rate; its gross sales total does not include returns. 
Despite the high cost of customer acquisition for most DTC retailers, Oddity says it is making money the first time a customer buys a product, not just in repeat sales, and it boasts more than 40 million users.
The business, which is as much of a tech company as it is a beauty and wellness company, is seeking to disrupt a market long dominated by legacy retailers by replacing the in-store experience with product recommendations driven by artificial intelligence and data. 

“How is it possible that this beauty customer is spending all of her time online, on Insta, on YouTube, getting education, inspiration, but then ultimately transacting in stores?” said Lindsay Drucker Mann, Oddity’s global chief financial officer. “It’s not that she wants to go to the store, it’s that she needs help. She needs help choosing, she needs recommendations.” 
And that’s where Oddity comes in.

How Oddity does it

Launched in 2018 by brother and sister duo Oran Holtzman and Shiran Holtzman-Erel, the heart of Oddity’s business model is its proprietary technology — including tech developed by a former Israeli defense official — and the billions of data points it has collected from its millions of users. 
A digitally native, purely DTC company, the retailer underscores that 40% of its workers are technologists and no one on staff come from the beauty and wellness industry. 
Instead of creating products that customers would need to try in a store, Oddity uses data and AI to make tailored product recommendations for clients. What’s more, it plans to use these same tools to build numerous new brands in the future.

Courtesy: Oddity

Oddity’s first brand, Il Makiage, works to select the “perfect” foundation match for any skin type with its “powermatch quiz,” which is an AI-powered product recommendation algorithm, the company says. The quiz takes customers through a series of questions about their skin type and tone and then scans a picture of their face to figure out the right shade. 
The company insists the algorithm works — and says it gets the shade right more than 90% of the time.
“If it did not work, we would have tons of returns, no repeats, and the economic model would fall upside down,” said Drucker Mann.
Oddity builds out new products and brands by using its tech to figure out what customers are looking for. Then it goes to its suppliers, which also serve the legacy beauty community. 
“We go to our suppliers with like, super specific product briefs on ‘we want you to create x’… based on all the data that we’ve looked at,” Drucker Mann explained. “We’re actually going a layer deeper into specific product attributes that will matter to the customer.” 
The company said it doesn’t share its data with its suppliers.
In 2021, the company acquired Voyage81, a deep tech AI-based computational imaging startup founded in 2019 by Niv Price, the former head of research and development for one of the Israeli Defense Forces’ elite technological units, Dr. Boaz Arad, Dr. Rafi Gidron and Omer Shwartz.
The tech is capable of mapping and analyzing skin and hair features, detecting facial blood flows, and creating melanin and hemoglobin maps using a regular smartphone camera. 
Oddity is in the process of integrating the tech into its Il Makiage powermatch quiz to improve accuracy. They claim one day it “could replace a dermatologist’s eyes.”

Reading the tea leaves 

Over the last year and a half, Oddity has made a series of moves that indicate it could be preparing for an IPO. 
In 2021, it tapped Drucker Mann, a former Goldman Sachs executive, to be its global chief financial officer. She spent more than 16 years with the Wall Street giant, most recently as its head of consumer and consumer-technology equity capital markets in the U.S. 
In the role, she took many businesses public and helped others that were trying to go public. She also led public and private equity financing for consumer and technology companies, including IPOs, follow-on offerings and private placements. 

Oddity SpoiledChild
Courtesy: Oddity

Later, in January 2022, Oddity brought in $130 million from investors such as Franklin Templeton and Fidelity Management, at a $1.5 billion valuation. Prior to that, the only outside investor Oddity brought in was private equity powerhouse L Catterton, which helped fund the company’s U.S. launch. 
Later that year, it announced the offering of a so-called security token, which would convert into a share of stock in an eventual IPO at a 20% discount to the opening price. 
“The CFO hire that was, I think, definitely a positive sign for an IPO, it’s something we look for in IPO candidates,” said Matthew Kennedy, a senior IPO market strategist for Renaissance Capital. “If the growth was good in 2022, then I’d say they’re firing on all cylinders and seems like they could be well poised to go public.”
He pointed to Oddity’s token offering as further evidence the company could soon have a public stock ticker. 
“An IPO has clearly been on their mind,” he said. “Companies that are not considering an IPO don’t issue a press release saying that tokens will convert at the time of an IPO.”
Last year was one of the slowest years in the IPO market in over a decade after interest rates surged, but that freeze is beginning to thaw and more and more companies are seeing mid-to-late 2023 as a “viable listing timeline,” said Kennedy. 
In his work at Renaissance Capital, Kennedy tracks every initial filing for the firm’s clients. Usually he looks for companies that have over $100 million in sales and the ability to be profitable within a few years of going public.
“Oddity is not one we had been tracking,” he said. “But I think we’ll keep an eye on it now.” 

‘We do see fads come and go’

In some ways, Oddity’s brands are reminiscent of the buzzy hair care line Olaplex, a technology-driven beauty company that had rapid growth at the time of its IPO only to see its stock plummet after it failed to reverse plunging sales.
If Oddity decides to go public, it will need to show investors it can sustain its rapid growth over time and not fade away as a fad. 
“I think the biggest risk is that they are growing off of this initial hype and consumer preferences can change rapidly and we do see fads come and go,” said Kennedy. 
Nikki Baird, a longtime retail analyst and current vice president of strategy at retail technology company Aptos, said DTC brands need to strike the right product mix in order to stay relevant, sustain growth and attract investors. 
“The DTC challenge and where lots of brands struggle is, you have this founder that has this one great idea for this product or they found some nut on some unique tree in Brazil that they’re bringing to market through their skin care product,” said Baird. “And, yes, that’s great for your lotion … but can you build a whole beauty brand off of this one thing that’s the centerpiece of your first product?” 
Oddity says it’s ready for the challenge – and thinking even bigger. 
“I believe what emerges from this moment will be the platforms of the future, right? I think right now we’re cementing those winners,” Drucker Mann said. “And, in my view, for Oddity, we are really creating the next generation, one of the most important consumer companies truly of our lifetime.” 

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Lowe’s sales in its fiscal fourth-quarter fell short of Wall Street’s expectations.
The home improvement retailer issued a conservative outlook as the sector comes under pressure from a shift in consumer spending.
The company beat Wall Street’s expectations for earnings per share for the quarter.

A Lowe’s Home Improvement Warehouse worker collects carts in a parking lot on August 17, 2022 in Houston, Texas. 
Brandon Bell | Getty Images News | Getty Images

Lowe’s on Wednesday reported fiscal fourth-quarter sales that fell short of Wall Street’s expectations, while also issuing a conservative outlook for the current year.
Here’s how the retailer did compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Earnings per share: $2.28 adjusted, vs. $2.21 expected
Revenue: $22.45 billion vs. $22.69 billion expected

The company’s reported net income for the three-month period that ended Feb. 3 was $957 million, compared with $1.21 billion, or $1.78 per share, a year earlier. 
Sales rose to $22.45 billion from $21.34 billion a year earlier. However, Lowe’s fiscal fourth quarter included an extra week that saw $1.4 billion in sales. Without that additional week, sales would have declined slightly from the year-ago period.
Overall same-store sales fell 1.5%, with a 0.7% decline in the U.S.
For fiscal 2023, Lowe’s said it expects total sales to be between $88 billion and $90 billion, compared with Wall Street expectations of $90.48 billion. The company also expects same-store sales to be flat or down 2% compared to the prior fiscal year.
The company expects its earnings per share for the year to be $13.60 to $14.00, versus $13.79 projected by analysts.

Lowe’s, which has been working to grow its Pro market, saw a 10% growth in sales in the category in the U.S. and a 5% jump in online sales.
This time last year, Lowe’s was benefiting from a red-hot housing market that led many to fix up and renovate their homes. As the market gradually cooled towards the second half of 2022, Wall Street’s expectations fell compared to prior quarters.
Amid the Covid pandemic, the home improvement market grew as stuck-at-home consumers undertook pricey renovations and spruced up their living spaces. The market is under more pressure these days. Shoppers feeling pinched from high inflation have been using their discretionary dollars on travel and entertainment as opposed to goods like patio furniture and paint.
Last week, rival Home Depot missed Wall Street’s revenue expectations for the first time since November 2019 and issued a muted outlook. The company anticipates flat consumer spending and more pressure on the sector in the quarters ahead as the pandemic-fueled boon subsides.
However, a persistent shortage in the country’s housing supply and an aging housing stock, which the home improvement sector has long benefited from, could benefit the retailers. With interest rates soaring in a stagnant housing market, many people with low interest rates may choose to stay in their homes and undergo renovations rather than move somewhere new.
Read the full earnings release here.

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Aston Martin Lagonda’s pretax losses swelled in 2022, but an improved guidance on EBITDA and wholesale units for 2023 boosted shares.
The company intends to become “sustainably free cash flow positive” from 2024.

The exterior of an Aston Martin store.
Jeremy Moeller | Getty Images News | Getty Images

LONDON — British luxury carmaker Aston Martin Lagonda forecasts better profitability this year, after widening its 2022 pretax losses on the back of a weakening U.K. currency.
The company more than doubled year-on-year pretax losses to £495 million ($598 million) in 2022, from £213.8 million in 2021, saying earnings were “materially impacted” by a revaluation of some U.S. dollar-denominated debt, “as the GBP [U.K. currency] weakened significantly against the US dollar during the year.”

Adjusted operating losses also swelled to £118 million last year, from £74 million in 2021. Revenues rose by 26% on the year to £1.38 billion, with gross profit up by 31% year-on-year to £450.7 million.
Despite acknowledging supply chain and logistics disruptions — which have been pervasive in the automotive industry, notably as a result of semiconductor shortages — the company said its wholesale volumes increased by by 4% year-on-year to 6,412. The figure included more than 3,200 of vehicles from the Aston Martin DBX range, of which more than half were driven by the launch of the DX707 SUV model unveiled in February last year.
Aston Martin Lagona shares soared, up 14% at 10 a.m. London time, after Aston Martin Lagonda issued more optimistic guidance for this year.
“For 2023 we expect to deliver significant growth in profitability compared to 2022, primarily driven by an increase in volumes and higher gross margin in both Core and Special vehicles,” it said Wednesday, flagging a pick-up in activity in the second half of 2023.
“In addition to the ramp up of the already sold-out DBS 770 Ultimate, we expect deliveries of the first of our next generation of sports cars to commence in Q3.”

The company expects wholesale sale volumes to pick up to 7,000 units in 2023, anticipating its adjusted earnings before interest, taxes, depreciation and amortization to add roughly 20%.
It noted the ongoing pressures of a volatile operating environment, high inflation rates and “pockets of supply chain disruptions.”
“Our order book’s never been stronger,” Aston Martin Lagonda Executive Chairman Lawrence Stroll told CNBC last month. “The future is fantastic, the cars are coming, fundamentals of the business are extremely strong. And demand has never been stronger.”

Stroll on Wednesday reiterated the company’s target to deliver 10,000 wholesale units over the coming years, as well as the target to become “sustainably free cash flow positive from 2024,” after raising £654 million of equity capital in a move that also saw Saudi Arabia’s Public Investment Fund become an anchor shareholder.
“Over the last three years, I have consistently referenced our target to deliver around £2bn of revenue and £500m of adjusted EBITDA by 2024/25,” Stroll said. “I am extremely proud that given the strong progress we have made to transform Aston Martin into a truly ultra-luxury business, demonstrated by the trajectory of our ASP and gross margin, we are on track to meet these financial targets, but with significantly lower volumes than I originally envisaged.”
“2022 in line with consensus is already positive news for AML,” Jeffrey analysts said in a Wednesday note, flagging the upside of the company’s guidance on units and EBITDA margin.

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Rocket Lab reported fourth-quarter revenue of $51.8 million.
Its order backlog doubled over the past year: From about $241 million in contracts at the end of 2021 to $503.6 million at the end of 2022.
“We pride ourselves on executing and we’ll back ourselves to execute this year,” Rocket Lab CEO Peter Beck told CNBC.
The company also completed the first production building for its coming Neutron rocket, as well as started construction of a launch pad for the rocket in Virginia.

Electron rockets undergo preparation for launch.
Rocket Lab

Rocket Lab said Tuesday it has doubled its order backlog — from about $241 million in contracts at the end of 2021 to $503.6 million at the end of 2022 — and made progress on the Neutron rocket that it’s developing.
“2022 we are generally very, very happy with, and what’s important to me is that we did what we said we’re going to do,” Rocket Lab CEO Peter Beck told CNBC.

“We pride ourselves on executing and we’ll back ourselves to execute this year,” Beck added.
The space company also reported fourth-quarter revenue of $51.8 million, up 88% from a year prior, with an adjusted EBITDA loss of $14.5 million – which was 75% wider than the fourth quarter a year ago. It had $484.3 million in cash on hand at the quarter’s end.
Rocket Lab conducted two successful launches of its Electron vehicle during the quarter, generating $12 million in revenue. Its broader Space Systems division continues to bring in the bulk of its revenue, generating $38.8 million.
The company also announced completion of the first production building for its coming Neutron rocket, built at NASA’s Wallops flight facility in Virginia. Rocket Lab began production of the first Neutron tank structures, as well as construction of the launch pad for the rocket. As for the next major milestone in development, Beck told CNBC that will be when there are “complete tanks rolling out” of its factory.
“With a composite launch vehicle, when the actual parts are coming off the molds, then that’s a far stronger indicator of progress than anything else,” Beck said. “To get to that point where we’re actually manufacturing these parts I think is a huge milestone in itself, but a bigger milestone is when a tank actually rolls out the door.”

Alongside its results, Rocket Lab announced a contract for four Electron launches from satellite company Capella Space. Those missions are scheduled to begin in the second half of the year.

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Shares of Rocket Lab are up 19% so far this year, as of Tuesday’s close at $4.50.
The company last month launched its first mission from the U.S. successfully. It aims to complete as many as 14 more Electron launches this year. For the first quarter of 2023, Rocket Lab expects to see launch revenue of about $18 million, and between $32 million to $35 million in Space Systems revenue.
Beck noted that Rocket Lab’s path to profitability is impacted by the “really heavy investments” it’s making in Neutron.
“I don’t think we’re terribly off our model in that respect, but it is heavily influenced by the spending rate and the success of the Neutron program, ultimately,” Beck said.
The company also announced that Bessemer Venture Partners’ David Cowan is leaving Rocket Lab’s board of directors in the first quarter, after nine years advising the company.

The company’s Electron rocket lifts off from LC-2 at NASA’s Wallops Flight Facility in Virginia on Jan. 24, 2023.
Brady Kenniston / Rocket Lab

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In November, Rivian reaffirmed its full-year guidance of an adjusted loss before income, taxes, depreciation and amortization of $5.4 billion.
For 2023, Rivian forecast vehicle production of 50,000 vehicles. That would be roughly double last year’s amount but below many analyst expectations of around 60,000.
Rivian is focusing on ramping up production of its R1 truck and SUV as well as an electric delivery van it builds for Amazon, its largest individual shareholder.

Rivian electric pickup trucks sit in a parking lot at a Rivian service center on May 09, 2022 in South San Francisco, California. 
Justin Sullivan | Getty Images

Electric vehicle startup Rivian Automotive reported mixed fourth-quarter earnings and a lackluster production outlook after the bell Tuesday.
Shares of Rivian were down by roughly 8% during extended trading. The stock closed Tuesday at $19.30 a share, up 4.6% for the session.

Here’s how Rivian performed in the period, compared with analysts’ estimates as compiled by Refinitiv:

Adjusted loss per share: $1.73 vs. $1.94 estimated
Revenue: $663 million vs. $742.4 million estimated

The company reported an adjusted loss before interest, taxes, depreciation and amortization of nearly $5.2 billion in 2022, narrower than guidance of a $5.4 billion loss in November.
For 2023, Rivian forecast vehicle production of 50,000 vehicles. That would be roughly double last year’s amount but below expectations of roughly 60,000, as estimated by several Wall Street analysts.
“Supply chain continues to be the main limiting factor of our production; during the quarter we encountered multiple days of lost production due to supplier shortages. We expect supply chain challenges to persist into 2023 but with better predictability relative to what was experienced in 2022,” the company said in its letter to shareholders.

Rivian said it expects to achieve a positive gross profit in 2024. Net loss for the fourth quarter was $1.7 billion — a narrower result than the $2.5 billion loss it reported a year earlier. Quarterly revenue of $663 million jumped from $54 million in the year-earlier period when the company had just started making its first products.

The results follow difficult times for the electric vehicle startup that have included slower-than-expected production, unexpected pricing pressure and plans to lay off 6% of its workforce in a bid to conserve cash.
Rivian is focusing on ramping up production of its R1 truck and SUV as well as an electric delivery van it builds for Amazon, its largest individual shareholder.
As of the end of last year, the company had about $12.1 billion in cash remaining, down from $13.8 billion at the end of the third quarter and $15.5 billion as of June 30. Capital expenditures for the fourth quarter were $294 million compared to $455 million during the year-earlier period.
Rivian said while inflation has been a factor in its supply chain, it will continue to take steps to ramp up production and reduce material costs by slimming down its engineering and vehicle design, along with commercial cost-down efforts.
The company’s forthcoming R2 model, for example, will use a simplified assembly and sourcing process to achieve “a meaningfully lower cost structure,” CEO RJ Scaringe said on an analyst call following the earnings report.
He added the automaker is “in a very different position with our supply chain today” relative to a year ago, which will help the company execute on more “aggressive cost and pricing” measures.
“It won’t necessarily be a linear path over the course of the next several quarters but we will start to see those impacts as early as Q1 as we start to reduce the material costs in our vehicles and the technology introductions,” said Chief Financial Officer Claire McDonough.
— CNBC’s Phil LeBeau contributed to this report.

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General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits.
The cuts affect about 500 positions, according to a person familiar with the plans, which were announced internally Tuesday.

Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE

DETROIT – General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits.
The cuts affect about 500 positions, according to a person familiar with the plans, which were announced internally Tuesday. They will be across various functions of the company, said the person, who asked not to be named because the plans are not public.

The timing of the cuts, which were first reported by The Detroit News, is odd. They come roughly a month after GM CEO Mary Barra and CFO Paul Jacobson told investors that the company was not planning any layoffs.
In a Tuesday letter viewed by CNBC, GM Chief People Officer Arden Hoffman confirmed the company’s goal of $2 billion in cost savings over the next two years, which “we’ll find by reducing corporate expenses, overhead, and complexity in all our products.”
The letter characterized the cuts,  which follow performance evaluations, would impact a “small number of global executives and classified employees following our most recent performance calibration.” The cuts started Tuesday and will continue based on location.
The company reiterated the cuts being a result of performance in an emailed statement, saying the cuts assist in “managing the attrition curve as part of our overall structural costs reduction effort.”
At the end of last year, GM employed about 86,000 hourly workers and 81,000 salaried employees worldwide. The 500 job cuts make up less than 1% of GM’s salaried workforce.

Jacobson told investors last month that the company expected to reduce employee headcount through attrition rather than layoffs.
Until recently, the automotive industry was largely unaffected by job cuts that had plagued the technology sector in recent quarters.
Ford Motor earlier this month confirmed it would cut 3,800 jobs in Europe over the next three years to adopt a “leaner” structure as it focuses on electric vehicle production. Others such as Rivian Automotive also made salaried cuts, while Stellantis said it would idle a plant in Illinois.

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Target will spend between $4 billion and $5 billion on capital expenditures in the fiscal year.
The big-box retailer plans to open and remodel stores, launch fresh brands and offer curbside services.
Target leaders acknowledged the retailer may have to work harder to get consumers to boost their spending.

An increased number of mannequins feature clothing and shoes throughout the remodeled Target store in Orange, California.
Jeff Gritchen | MediaNews Group | Getty Images

NEW YORK — As Target sees growth slowing in sales and customer traffic, the company said Tuesday it will spend between $4 billion and $5 billion in the coming fiscal year to offer fresh merchandise, new services and faster delivery.
Target aims to launch or expand more than 10 private label brands, open about 20 new stores and offer curbside delivery to customer motorists who won’t have to leave their cars.

In addition, the retailer plans to remodel about 175 existing stores. It also intends to expand a network of hubs to make it cheaper and faster to get online orders to customers.
“In an environment where consumers are making tradeoffs, more of the same is not going to get it done,” Christina Hennington, Target’s chief growth officer, said Tuesday at an investor event in New York.
She said the retailer’s newer and trendier products are the ones that keep selling, even as inflation pushes shoppers to pay closer attention to their spending.
Target, which reported fourth-quarter earnings Tuesday, shared details about its strategy to attract shoppers who have become more reluctant to spring for the discretionary merchandise they bought during the first two years of the Covid pandemic.
Target plans to offer more items at lower price points, such as $3, $5, $10 and $15. It kicked off the year stocked up on everyday essentials like food or cleaning products. Inventory in discretionary categories fell about 13% compared with a year ago.

“Given value is absolutely top of mind right now, being able to deliver affordable joy differentiates us in the marketplace,” CEO Brian Cornell said. “And that’s a clear advantage in the near term and remains our focus over the long term.”

A shopper entering a Target store in New York.
Scott Mlyn | CNBC

The retailer’s dilemma

Target plans to spend less on capital expenditures than this past fiscal year, when it spent $5.5 billion. Its goal for store projects is also slightly lower compared to the 23 new stores and about 200 remodeled ones it announced for fiscal 2022.
The investment plans underscore a dilemma that other retailers face, as well: As the economic backdrop remains uncertain and high inflation persists, companies will have to get creative and work harder to win over customers — or risk posting weak sales.
Other retailers’ plans reflect that challenge, too. Walmart and Home Depot’s forecasts both anticipate a slowdown, yet they recently announced wage increases to attract and retain store workers. Home Depot said it will spend $1 billion on workers’ wage increases to help boost customer service, even as it projected approximately flat sales growth for the fiscal year.
Alongside its investment plans, Target said it aims to reduce up to $3 billion in total costs over the next three years, saying it wanted to become more efficient after its revenue grew about 40% since 2019.
Target is one of many retailers that dealt with whiplash over the past year, as shopping patterns changed dramatically, said Jessica Ramirez, a senior retail analyst at Jane Hali & Associates. She said retailers realized, once again, they must listen to customers, stay nimble and “future-proof” their businesses.
“You have to really pay attention,” she said. “If apparel isn’t moving well, what are the categories where things are moving? Are they [customers] going to walk in for groceries and then if they see something for return to office and it’s a good price, they’ll pick it up?”

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