Target Corp. (TGT) announced Monday, Sept. 25, that next month the company will raise its minimum hourly wage to $11 for all U.S. employees, higher than the minimum wage in 48 U.S. states.
The new Target minimum wage is about 50% greater than the federal minimum hourly wage of $7.25 and matches the minimum wages in Massachusetts and Washington, the highest in the country. The Minneapolis-based retailer also committed to raise minimum wages across the company to $15 by 2020. The increase also applies to the over 100,000 seasonal employees Target is hiring for this year's holiday season.
Target CEO Brian Cornell said on a call with reporters that the minimum wage increase is an example of the significant investments outlined at the company's February investor day, including investments in digital infrastructure, data and supply chain.
"This significant investment in its team will allow Target to continue to recruit and retain strong team members and provide an elevated experience for its guests and in the communities it serves," Target said in a statement.
The minimum wage increase is not expected to impact Target's third-quarter and full-year financial results.
The increase comes less than two years after Target last raised its minimum wage, to $10 an hour. The move matched a similar increase at Walmart Stores Inc. (WMT) to $10 per hour earlier in 2016.
As Target competes with behemoths like Amazon.com Inc. (AMZN) and Walmart, it's emphasizing "small-format stores" in densely populated urban and suburban areas and college towns, replacing brands with a sales volume of over $10 billion and beefing up its digital sales infrastructure.
Just last week, Target unveiled an expansion of its Target Restock program, adding the next-day delivery service for nonperishables to Atlanta, Chicago, Los Angeles, New York, Philadelphia, San Francisco, St. Louis, and Washington, D.C. Earlier this month, Target said it would cut the prices of "thousands of items, from cereal and paper towels to baby formula, razors, bath tissue and more" while eliminating "more than two-thirds of our price and offer call-outs" so customers could be confident they were getting the lowest everyday price. The move came a few weeks after Amazon completed its $13.7 billion acquisition of Whole Foods Market and immediately slashed prices.
Target reports its earnings on Nov. 22. According to FactSet, analysts expect the company to post earnings of 85 cents per share on sales of about $16.5 billion. Target predicted earnings from continuing operations of 75 cents to 95 cents per share for the quarter and $4.35 to $4.55 for the full year.
Shares are down 18.3% year to date, while the S&P has risen 11.8% during the same period.
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