Target is no longer looking back.
The retailer got rid of COVID-19 mask requirements in its stores last week. And on Tuesday, executives tried to convince investors it's still a growth company even as the outsized sales gains Target experienced in the pandemic come to an end.
"We see a growth horizon for years to come," Brian Cornell, Target's chief executive, said in New York as the company staged an in-person event for financial analysts for the first time in three years.
"We will continue to invest in our strategies," he added. "We will continue to invest in our capabilities. We will continue to nurture a team that cares."
Executives said Target in the years ahead could grow faster than it did in the years before the pandemic. As a first step, they said Target will invest up to $5 billion this year to improve digital experiences and fulfillment capabilities and open 30 new stores and remodel a couple hundred more.
Target shares rose nearly 10% as investors absorbed the outlook as well as the company's latest quarterly results, which were still well above its pre-pandemic routine.
Its profit rose nearly 12% to $1.54 billion during the holiday quarter that ended Jan. 29, beating analysts' expectations.
Revenue was up 9.4% to nearly $31 billion, which pushed its full-year revenue to $106 billion. Target became just the third Minnesota-based company, after UnitedHealth Group and Cargill Inc., to surpass $100 billion in annual revenue.
Target's comparable sales grew 12.7% in 2021, outpacing the 12.3% gain in comparable traffic and showing that customers were spending more at its stores and online.
"It's clear we are still in the midst of the pandemic, but we have entered a new phase and in this phase we're still facing multiple challenges and uncertainties including a tight labor market and persistent supply-chain bottlenecks," said Michael Fiddelke, Target's chief financial officer.
"However, the last couple of years have also proven the durability and flexibility of our business and financial model," he said.
Target was one of the few retailers to experience major growth in the pandemic. Two years ago, it reported revenue of just over $78 billion for the 12 months ended January 2020.
"All that said, Target is now entering a tougher period," said Neil Saunders, managing director of GlobalData. He noted inflation may cause consumers to rein in their spending.
Over the last decade, Target's sales grew less than 4% annually until 2020. The company even saw revenue decline in 2013 and 2016. Executives said Tuesday that in coming years the company will aim for annual revenue growth in the mid-single digit percentage range.
Edward Jones analyst Brian Yarbrough said it may be a stretch for Target to reach this year's goal, noting its executives expect most of the growth to be in the later part of the year.
"Anytime a company weights things toward the back half and [thinks] business will improve, there are risks there," Yarbrough said. "It all comes down to consumer spending. Do consumers continue to spend like they have?"
Cornell expressed confidence that they will.
"We continue to see a very resilient consumer who has a solid balance sheet and who is balancing that desire for value and concerns with inflation with a desire to find something new and just go back out and experience everyday life," he said.
A day earlier, Target announced it was increasing its starting wage range for employees to as much as $24 an hour depending on the role and market.
Following the test of a sortation center Target opened in Minneapolis, five more facilities are set to open by the spring and another five later this year to help with next-day shipping.
Target will also expand its services and product offerings. After opening 100 Ulta Beauty shop-in-shops at Target stores last year, Target plans to open more than 250 new locations by the end of 2022. Last week, the retailer also announced a new pilot to test drive-up returns at select markets this fall.