The discount retailer said Tuesday it will open 30 small format stores this year, giving it about 62 when all is said and done. Target plans to have more than 130 of these locations open by 2019.
Target refers to the store as "flexible format," which is basically a store that hawks a highly edited assortment of apparel and home goods. It also offers more grab and go food such as pre-made sandwiches that cater to hurried city dwellers. Target has opened the stores across the country in urban areas such as Chicago and Philadelphia in recent years.
"These stores are bringing us into new neighborhoods and to college campuses across the country, expanding our footprint in cities like New York, Philadelphia, Boston and Chicago. We've been really pleased with the stores' performance -- sales productivity in these stores is much higher than the company average and flexible formats consistently meet or exceed their profitability targets," Target Chairman and CEO Brian Cornell explained to TheStreet in an interview last year.
At least for now, however, Wall Street could care less about Target's targeting of urban hipsters.
The discount retailer reported fourth-quarter adjusted earnings of $1.45 a share, badly missing Wall Street estimates of $1.51. Same-store sales declined 1.5%, also missing estimates for a 1.3% decline. For comparison, Walmart (WMT) - Get Report U.S. delivered a same-store sales gain of 1.8% during the fourth quarter, propelled by lower prices in food.
Target said it sees full-year earnings of $3.80 to $4.20 a share, markedly below analysts' forecasts of $5.34.
"Efforts have not been enough to win in this challenging marketplace," Cornell said at a meeting with analysts. He added the marketplace is placing "stress" on Target's financial model. Target said it will invest $1 billion this year in operating margins.
"I am surprised like everyone else," Deutsche Bank analyst Paul Trussell told TheStreet via email.
Target shares finished the session sharply lower by 12% to $58.77.