(Reuters) – Target Corp (TGT.N) withdrew its financial outlook on Wednesday and said it would cut planned investments to focus on meeting growing demand as Americans stock up on essentials and stay at home to slow the spread of the epidemic of coronavirus.
A Target shopping cart is visible in front of the logo of a store in Azusa, California, in the United States, on November 16, 2017. REUTERS / Lucy Nicholson
The big box retailer said it now plans to renovate only about 130 stores in 2020, up from 300, moving the rest of the projects to 2021. Target added that it would open fewer small stores than it hadn’t expected before.
“It has become very clear that we need to be disciplined to ensure that our stores and our supply chain focus on serving our customers without unnecessary distractions,” said CEO Brian Cornell.
“We will have to prioritize the flow of food, medicine and other essentials for the foreseeable future.”
In recent weeks, consumers have flocked to stores to stock up on canned food, disinfectants, toilet paper and other essentials as the pandemic keeps Americans confined to their homes, forcing retailers, including Target, to limit the number of items that can be purchased in a single shopping spree.
Cornell said demand was “unprecedented,” comparing buying behavior to levels sometimes seen during natural disasters.
Target had presented its first quarter forecasts and investment plans for 2020 just three weeks earlier and announced last year a new $ 5 billion share buyback program. The buyout is now suspended.
Until March, Target’s total same-store sales were up over 20% from the previous year, as sales of essentials, food and beverages increased by more than 50%.
The company also expects higher-than-expected costs, driven by higher wages and benefits for front-line workers, and to maintain essential inventory.
Target, like many other retailers, has cut store hours for cleaning and restocking and said last week that it would raise minimum wages by $ 2 an hour for store and center workers distribution until May 2.
Competitors such as Amazon.com Inc (AMZN.O) and Walmart Inc (WMT.N) also increased wages and hired a wave of hires to handle a spike in orders.
The virus, which has infected more than 44,000 people in the United States, causing more than 500 deaths, has led to the closure of several companies and raised fears of a global recession.
“There is no manual on how to react in this environment. We write the script every day, ”said Cornell.
Aishwarya Venugopal’s reports to Bengaluru; Editing by Shounak Dasgupta
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