Target CEO withdraws forecast, curbs spending
Amid the coronavirus outbreak, Target has been forced to scale back the remodeling of new store openings as people stay home. Yahoo Finance’s On The Move panel breaks down the details.
Video Transcript
ADAM SHAPIRO: I want to talk about one of the nation's largest retailers. That would be Target. And Target's CEO announcing that they are suspending their guidance. They are also going to adopt policies to minimize the risk to their employees. They are temporarily banning all returns and exchanges. They're also pulling back on their plans to renovate stores and open new stores.
To talk about all of this, I want to bring in Julia La Roche, who understands retail as well as anybody. Julia, what do you think of these moves?
JULIA LA ROCHE: Hey. That's right, Adam. Well, it's a little interesting to me, especially when you think about the guidance, because in March comparable sales have surged 20%. Now, comparable sales in essentials like food and beverage are up 50%, yet you're having trouble when it comes to some of those higher margin areas, which includes things like apparel. The CEO noted that swimsuits were down.
And this is reporting by our very own Brian Sozzi, who was on a call with CEO Brian Cornell just last night. So as you were referencing, the company, which has announced a big investment the last few years about store remodeling, they've slowed that down. In 2020, they'll only do 130 stores. That's down from the expectation of 300 stores.
They're also doing fewer openings for that smaller format that they had been moving toward. They're doing 15 to 20 of those store openings, which is down from that expectation of 36 going into the year. But again, a lot of the growth right now is coming from the things that we're all talking about when it comes to retail, and it's those pantry staples and the cleaning products, those sorts of things. But I guess the other areas are taking a hit in the meantime.
ADAM SHAPIRO: Julia, when you've had discussions-- I know that you talk with the folks at Walmart. Brian, actually,-- Brian Sozzi-- asked the CEO of Target questions about toilet paper and getting toilet paper stalked again.
JULIA LA ROCHE: Yeah.
ADAM SHAPIRO: Has Walmart talked about these, you know, basics that we all took for granted just a month ago and now you have to buy on the black market?
JULIA LA ROCHE: They have. And you know, this is something that they're working on when it comes their supply chain. When I was on a call with a Walmart executive just last week, when we were talking about what they're doing for their associates, the toilet paper question came up too. And they're perplexed as well. I guess you can-- I mean, there are articles on the internet as to why people are stocking up on toilet paper. Some people seem to be getting more than they probably should.
But this is something that's a big focus for the retailers. I think it's really also important to hit on this, Adam,-- and we've talked about this in our own conversations-- what they're doing to protect their workers, because they are on the front lines right now. And they're making sure that their stores are really, really clean. If you look at Walmart specifically, they've put in floor decals to help people keep that six foot distance between each other to aid in social distancing.
You will see associates wear gloves. They're not forced to wear gloves, but they probably will. They're also wiping down those high touched areas, like the freezer handles, those sorts of things. And also, they have cleaning solutions for the carts. They're making sure that the carts are really clean. And they added sneeze guards at the pharmacy, because at the end of the day, these are the retailers-- whether it's Target, Walmart, Kroger, or whatever, that are on the front lines within the neighborhoods of Americans. And they're the ones providing the essentials during this time.
ADAM SHAPIRO: And a little trick, by the way, at the Walgreens here in New York City, not far from this apartment. They don't have the hand sanitizers out on the shelf, but if you ask at the counter they've got it behind the counters.
