Target Upgrading Supply Chain And E-Business Investment Is A Little Big

On Wednesday's investor day, Target Corp. (NYSE:TGT), Taghit, the largest department store retailer in the United States, elaborated on the capital expenditure plan of 1 billion 800 million -25 billion dollars in the short term, investing huge amounts of money into the supply network and technology infrastructure to invest in the e-commerce era with a more flexible body.

Although Target Corp. department stores in Taghit had a 2.1% growth in the same sales year in fiscal 2015, the group was still not satisfied, and considered that the further increase in the number was due to the extremely complex supply chain leading to an unacceptable level of inventory.

This level is not a big headache for most retailers in the four seasons holiday season. It is often uneven in the Target Corp. Taghit department store. Nearly 1800 stores in the United States often have shelves that are forced to empty and sell.

One of the reasons for this embarrassment is that customers who choose to click on the goods (online ordering entity store pick up) service are soaring, and stores can not take into account the needs of both the passenger flow and the online shopping.

John Mulligan Mulligan, the group's chief operating officer, told investors that orders for clicks and pickups rose by 60% over the past year. The function of the store had to expand from the purchase place to the showroom, order fulfillment center and pickup point. The situation became extremely confusing and complicated.

John Mulligan points out that the group must optimize the supply process to ensure that it has a solid foundation to support such businesses.

In terms of supply chain upgrading, the group took the lead in appointing personnel on Monday, announcing the poaching of Amazon.com Inc. (NASDAQ:AMZN), the world's largest electricity supplier.

Arthur Valdez, the executive vice president and chief supply chain and logistics officer of the group, has been working for 16 years. Arthur Valdez is the vice president of supply chain and logistics operations at the recent position of Amazon Amazon.com Inc..

To achieve the rationalization of stock level, one of the group's strategies is to simplify the product structure, so that the brand, size and taste of the store will be reduced, and the salable products will be focused.

The group will also increase its shelves and require suppliers to pay for packaging in line with shelf capacity, reducing storage space. John Mulligan said it would be a surgical process, and the group will evaluate each category.

The group will continue to set up more smaller stores in the urban areas to localize products to suit local market needs.

In terms of digital business, both online and mobile sales are the focus of group improvement.

At the same time last year, Brian Cornell Cornell decided to cut costs for the group's investor day in 2015, aiming to cut $2 billion in expenditure before fiscal year 2017, by cutting thousands of jobs through the restructuring of enterprises, increasing the input of resources after the compression of labor costs and increasing investment in technology, supply chain and inventory management.

This year's theme investment is only an extension of the strategy established last year.

This established strategy has achieved initial success.

In the four seasons holiday season last year, the stock shortage level dropped by 40% compared with the same period of the previous year. The 1.9% contribution to the same store sales increased from 1.3% to 1.3%. The net sales of the group increased by 34% compared to the same period last year, but the growth rate still failed to reach the 40% target set in March last year.

The group also provided financial targets for the current fiscal year.

It will decline by 3%-4% due to the sale of pharmacy and clinic business, but the same store sales will increase by 1.5%-2.5%. The adjusted diluted earnings per share will be 5.20-5.40 US dollars, adjusted by the diluted earnings per share, which is better than the market expectation of US $5.16.

The group's expected adjusted earnings per share in the first quarter were 1.15-1.25 US dollars, which was in line with the market forecast of US $1.20.

The current 2016 fiscal year, Target Corp., Taghit department store's supply chain and

The investment budget is $1 billion 800 million, a 80% increase over the $1 billion in fiscal year 2015, while the budget for 2017 will increase by nearly 40% compared to this year, to an additional $2 billion 500 million.

The Group expects such a huge investment to boost the annual growth rate of same store sales from 2017 to 3% or more.

Target Corp., chief executive officer of Taghit department store, Brian Cornell, has been streamlining since she came to power in 2014.

At the beginning of 2015, the pharmacy and clinic services were sold at the end of the year after the withdrawal from the Canadian market.

At the same time, he refocused on the supply of some of the most potential brands of fashion, baby, children, health and home, and strengthened the fresh grocery business which emphasized organic health, and established the status of "cheap fashion" products in the middle class of the United States.

Prior to the current investment plan, Brian Cornell has also been making efforts in promoting digital services and reengineering supply chains.

After a massive data breach in early 2014, Brian Cornell, who was in office in August, told about 250 investors and insiders in New York on Wednesday. "Our customers are starting to fall in love with Target again."

However, he later said that it is still a long way to go before announcing victory. Although the momentum is full of confidence, it has a long way to go.

At the time of the deadline, Target Corp. (NYSE:TGT) fell 2.06% to 79.43 dollars on Thursday afternoon.

The stock has risen 9.5% so far in 2016, winning a 2.9% decline in the S & P 500 index.