This is Why Target Shares Plummeted Today

Big box retailer Target saw its shares take a nose dive on Tuesday after the company revealed it will be spending $4 billion annually for the next several years to invest into various initiatives.

The announcement was made at Target’s investor day.

The amount is higher than the $2.7 billion Target spent on capital expenditures in 2020, and the $3 billion spent in 2019.

Target has been concentrating on accelerating new store growth to 30 to 40 stores annually from 30 new openings in 2020. The company also has plans to remodel 150 stores this year, and then push that to 200 remodels a year thereafter.

The company additionally aims to open five merchandise sortation centers this year, which will serve as hubs to help speed up deliveries to customers ordering more online.

“The bold investments planned for the next few years are designed to scale key capabilities across stores, fulfillment, and supply chain to drive deeper engagement with new and loyal guests, continued market share gains, and long-term, profitable growth,” remarked Target CFO Michael Fiddelke.

Target shares fell close to 5% on the news as Wall Street digested the figure.

The company’s total sales exploded 19.8% to $93.6 billion last year amid the pandemic. Target has gained high marks with pandemic-weary shoppers for its same-day pickup services, expanded food and cosmetics assortments and same-day delivery via its Shipt option.

Target shares have gained 209% since last February.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.