Target Continues Its World-Class Execution Led By Same-Day Services Growth
#Target continues its WORLD CLASS EXECUTION In Q3 Earnings Led By SAME DAY SERVICES GROWTH
1 - Leadership and Priorities Set the Tone
- Everything starts here. There is one set of small enterprise-wide priorities on the things that matter. This enables better execution and collaboration.
- In contrast to many companies where the "list of priorities" number in the dozens.
- You cannot collaborate across departments without enterprise-wide priorities, period.
2 - Significant Growth in Same Day Services
- Same day up 60% on top of 200% year ago.
- Driveup/curbside leads increased 80%, on top of 500%+ year ago.
- Supply chain mix materially shifting: ship to home declined slightly. "Meaningfully more profitable than ship to home."
- In store pickup + Shipt up 30%
Target has written the playbook on the modern retail supply chain over the past 5 years. Now it's up to Amazon and Walmart to follow it.
This is on top of ---- - Stores comp sales 9.7% on top of 9.9% last year. - Digital comp 29% on top of 55% a year ago.
3 - More Profitable Than Its Peers, and Pulling Away
- Target moved to 8% operating profit margin from 7% in 2020. -- Contrast with Amazon at flat to -1% Retail Margin -- Contrast with Walmart ~3% retail margin
- 95% of all shipments handled from stores (digital+sameday)
- Due significantly to lack of markdowns (smart merchandising, inventory), best-in-class hiring practices (more hours for current workers, hiring successes), and leverage due to same day services (significantly more profitable than traditional ecom)
4 - Best in Class Hiring Practices
- Store worker hiring targets on track
- Existing workers being bonused + working more hours as planned
- Store turnover - particularly with new workers - down.
- Adding 30k permanent supply chain roles into next year.
WRAPUP:
You wonder why Amazon is getting more into physical #retail? It's not much of a mystery. Operating Profit Margin.
IMO Target is not only kicking sand in the face of investors looking to split digital + physical, it is digging a grave for them and kicking them into it.
