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Globe and Mail
an hour ago
- Business
- Globe and Mail
Does Target's Store-as-Hub Model Still Offer a Competitive Edge?
Target Corporation 's TGT store-as-hub model remains a pivotal competitive moat, seamlessly blending the physical and digital shopping experiences to enhance customer convenience. Despite facing macro pressures, Target has leaned heavily on its nearly 1,981 store locations (as of May 3, 2025) to drive both in-store and digital fulfillment. 96% of first-quarter fiscal 2025 sales volume were fulfilled through stores, underscoring the efficacy of this model. The model enables faster delivery, enhanced customer convenience and cost efficiencies that pure-play e-commerce retailers struggle to match. Same-day services, including Drive Up and same-day delivery through Target Circle 360, are tightly integrated into this store-as-hub network. These offerings have shown robust momentum, with same-day delivery growing more than 35% in the last reported quarter. Furthermore, the average "click to deliver" speed improved nearly 20% year over year, with more than 70% of first-quarter digital orders fulfilled within a single day. This infrastructure actively drives higher engagement and supports the digital ecosystem, including Roundel and Target Plus. Furthermore, ongoing store remodels and commitment to opening about 20 new stores indicate Target's belief in this strategy. While competitors may chase similar omnichannel capabilities, Target's embedded network and operational experience position it to maintain a meaningful advantage in fulfillment speed. Despite recent sales challenges, the store-as-hub model remains integral to Target's growth playbook, offering flexibility, efficiency and relevance in the current retail landscape. How WMT and BBY Leverage Store-as-Hub Models Compared to TGT Walmart Inc. WMT continues to strengthen its store-as-hub model, using its expansive store network to power same-day pickup and delivery. Walmart's integration of stores with digital fulfillment remains a key competitive advantage, supporting its U.S. e-commerce orders through store-based operations. Walmart's ongoing investments in automation and last-mile delivery reinforce this strategy, allowing it to compete aggressively on speed and convenience. Best Buy Co., Inc. BBY also leans heavily on its store-as-hub strategy, utilizing its store fleet to fulfill a significant portion of online orders through same-day pickup and ship-from-store. Best Buy's stores enable rapid fulfillment, while enhancing operational efficiency. Best Buy's ability to leverage physical locations as fulfillment hubs strengthens its competitive positioning. Target's Price Performance, Valuation and Estimates Target stock has risen 10.4% over the past three months compared with the industry 's growth of 0.3%. Target's forward 12-month price-to-earnings ratio of 12.99 reflects a lower valuation compared with the industry's average of 31.61. TGT carries a Value Score of A. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Target's current financial-year sales and earnings per share implies a year-over-year decline of 1.8% and 14.8%, respectively. Target currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report Best Buy Co., Inc. (BBY): Free Stock Analysis Report
Yahoo
4 days ago
- Business
- Yahoo
Where Will Target Stock Be in 3 Years?
Key Points Target stock is down on slumping sales and global trade uncertainty. The company is growing two important digital businesses over the next three years that could reinvigorate its bottom line. 10 stocks we like better than Target › Here in 2025, shares of Target (NYSE: TGT) have hit five-year lows. Sales are slumping. And on top of that, global trade uncertainties can potentially squeeze the company's profit margins. For these reasons and more, investors are eager to head for the exit. But where will Target be in 2028? That's a question worth exploring. Whereas many top stock analysts focus only on the present quarter or year, everyday investors can make money by extending their view farther out. And looking three years out is a good place to start. What Target is doing right now In the first quarter of 2025, Target generated net sales of $23.8 billion, a result of a disheartening same-store-sales decline of nearly 4%. A decline is expected on a full-year basis as well. On one hand, it makes sense to be disheartened with these top-line numbers. After all, lower sales usually hurt profits, which is the case here. For 2025, management expects earnings per share (EPS) of $10 in a best-case scenario. For perspective, Target had EPS of over $14 just a few years ago. On the other hand, even with a sales slump, Target should generate around $100 billion in net sales in 2025. Net sales of this magnitude suggest that it's still a top-of-mind brand for consumers, and that's hugely important when considering the company's future opportunity. Target is a brick-and-mortar chain that's building a digital business. And being in the forefront of consumers' minds helps tremendously. There are multiple components here, but the two that I want to talk about are Roundel and Target Plus. First, Roundel is Target's nascent retail media business: the union of retail and digital advertising. The company is able to package its robust consumer data set to advertisers. Sometimes it generates advertising revenue directly, and other times brands lower their prices to promote their products. But overall, this is already a $2 billion business for the company, and this revenue stream enjoys better profit margins. Likewise, Target Plus also has the potential to help profit margins. The company allows third parties to sell on its e-commerce marketplace, just like its major rivals. As a reminder, e-commerce platforms do this for a simple reason: It's more profitable. Whereas selling first-party merchandise usually is a low-margin proposition, facilitating third-party sales and taking a cut can be quite lucrative at scale. Where will Target be in 2028? On the surface, Target seems like a low-growth opportunity with a modest 4% profit margin -- it hardly seems attractive. But I believe the next few years will be better than what many analysts anticipate. For starters, Roundel is expected to go from a $2 billion business to a $4 billion business by 2029. And Target Plus is expected to facilitate $5 billion gross merchandise value by 2029. Assuming it has a 15% to 20% take rate (not unheard of), this would be a $750 million to $1 billion business for Target. In other words, considering its 2029 targets for Roundel and Target Plus, the company has a clear path to adding around $2 billion to $2.5 billion in revenue by 2028. Some may be unimpressed by this possibility. After all, Target is a $100 billion business; adding $2 billion is only a 2% boost. That's true. But investors would do well to remember that this boost wouldn't come from low-margin merchandise. Rather, it would come from its high-margin digital businesses. In other words, I believe that most of the gains from Roundel and Target Plus would drop directly to the bottom line. And that's a huge deal considering it only has $4.2 billion in trailing-12-month net income. For this reason, I wouldn't be surprised to see a boost of 40% or more in profits over the next three years. And considering that stock prices tend to follow profits over the long term, I wouldn't be surprised to see a similar move for the stock, which might be just enough to outperform the S&P 500. The kicker here for Target investors today is its dividend. Having paid and raised its dividend for more than 50 consecutive years, it's an elite dividend stock, and right now the yield is unusually attractive at more than 4%. It's an oversimplification, but if its profits keep going up, one would expect its dividend to also keep going up. In conclusion, I believe that Target has an opportunity to be a market-beating dividend growth stock over the next three years if it executes well with its digital businesses. And that's something that a lot of other investors might be missing today. Should you buy stock in Target right now? Before you buy stock in Target, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Target wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,281!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,415!* Now, it's worth noting Stock Advisor's total average return is 1,058% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy. Where Will Target Stock Be in 3 Years? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
7 days ago
- Business
- Yahoo
Target's Roundel powers up offsite campaigns with AI-driven analysis
This story was originally published on Marketing Dive. To receive daily news and insights, subscribe to our free daily Marketing Dive newsletter. Target's retail media network Roundel has introduced a new artificial intelligence-powered feature designed to help advertisers use the retailer's first-party data and real-time shopping customer behavior to optimize offsite media campaigns, according to a company blog post. With Precision Plus by Roundel, advertisers can leverage data to build and launch campaigns aligned to specific awareness, consideration and conversion goals across platforms including Google, Meta, Pinterest and The Trade Desk. The retailer plans to invest heavily in Roundel throughout the year, including testing new in-store ad experiences like demos, sampling and digital screens; enhancing creative formats across the omnichannel journey, and providing more support for partners during seasonal campaigns. Roundel has become a bright spot for Target at an otherwise troubled time for the retailer. The company's revenue derived from its advertising business rose roughly 24% year over year to $649 million in 2024, with Roundel making up the lion's share of the segment. Target's plans to invest in Roundel come at a pivotal time for retail media networks and may be designed to address some of the challenges brands have faced when trying to make use of retail media. Even though the space has become crowded with competition, most networks have yet to deliver on their promises of data usability for more efficient and effective marketing campaigns, according to research. The size and impact of retail media networks have been overstated, according to Forrester, due to the dominance of one player: Amazon. In 2024, Amazon Ads' business was worth $47 billion, which was larger than all of the other retail networks combined. The next largest network was Walmart, with only $3.4 billion in revenue. Precision Plus by Roundel joins other recent updates like the introduction of more competitive pricing for ads that are intended to boost Roundel. Other features being spotlighted by the retailer include Target Product Ads, which use Target data to meet customers where they are and have shown to increase sales growth by as much as 35%; a new self-service creative studio; geo-enabled measurement tools and a digital-out-of-home feature that can place ads on billboards near Target stores that is connected to Roundel for closed-loop measurement. Roundel works with more than 2,000 vendors, including publishers like Pinterest, PopSugar, NBCUniversal, Hearst, USA Today and The New York Times, to deliver ads for brands such as Apple and Mars Wrigley. The company claims its network drove more than 250 million visits to Target properties in 2024. Other retailers are also trying to make their media networks more competitive. Walmart, for instance, purchased electronics company Vizio for $2.3 billion last year, giving the retailer a foothold in the connected TV marketplace. The company also revamped its Sam's Club Member Access Platform (MAP) with a stronger focus on personalized ads. Recommended Reading Target's digital ad unit delivers $2B in value for embattled retailer
Yahoo
06-03-2025
- Business
- Yahoo
Target sounds a warning on consumer health
This story was originally published on Supermarketnews. Target kicked off its quarterly earnings call on Tuesday talking about a reinvigorated strategy, one that is more attentive and focused on delivering a bigger assortment of goods more swiftly. It may be a needed shift, as the Minneapolis-based retailer has found itself on a streak of soft quarterly earnings, and the fourth quarter was not much different. Putting added pressure on retailers is President Donald Trump's 25% tariff on goods from Canada and Mexico, which has been met with retaliatory tariffs on Tuesday. Grocery was an area of growth for Target during the entire fiscal year, but overall fourth quarter results were modest as comparable sales were up 1.5% year over year. For the full year, comparable sales showed just a 0.1% rise. Interesting to note is Target pulled away from its Diversity, Equity, and Inclusion (DEI) goals during Q4. 'While there are some encouraging signs in the economy, there are also stubborn pressures impacting families and retails,' Christina Hennington, Target's executive vice president and chief strategy and growth officer, said during the call. In 10 years Target outlined its goals for the next decade: Comparable sales are expected to be the primary source of growth with increases in the low- to mid-single-digit range annually The retailer plans on remodeling most of its existing stores and will open 300 new stores The new stores are expected to generate about $15 billion in incremental sales annually Outsized growth in other revenue is also expected. This has been driven in recent years by Target's Roundel ad business, which has contributed more than $1.5 billion of value to the retailer Target Plus is expected to make a more meaningful contribution over the next 10 years Total revenue is expected to grow by an average rate of about 4% per year Korean flavor Target is teaming up with Minneapolis restaurateur Ann Kim under its Good & Gather private label brand. The frozen food will include four pizzas and three Korean-inspired frozen appetizers including kimchi dumplings. By the numbers: Digital comparable sales grew 8.7% year over year in the fourth quarter Same-day delivery—Target Circle 360—grew more than 25% Traffic grew by 1.4% for the full fiscal year Net sales are projected to grow in a range of about 1% in 2025 Sign in to access your portfolio
