NEW YORK — Target is raising the minimum hourly pay to $12 starting this spring, the next growth in a matter of weeks, while hastening its reinvention plan to generate the discounter more competitive in the time of Amazon.
The discounter’s moves, announced at its yearly investor meeting in Minneapolis, in which the provider is based, come as its ambitious plan to create itself is forcing more people to its own stores and its site. However, the cost of such a gigantic overhaul, together with its pay increases, squeezed its fourth-quarter gains, and it took a shine off entire strong quarterly sales.
The business also offered a muted gain perspective.
In fact, shares were trading lower Tuesday to the information of muted gains prior to the announcement of the pay hike. And investors punished the stock farther, sending shares down almost 5 percent.
Last autumn, Target raised its hourly wage to $11 from $10. Brian Cornell, CEO of Target, told analysts Tuesday the firm saw a greater applicant pool plus a 60 percent spike in the amount of applicants in the days following the announcement. Cornell reiterated Tuesday its promise to boost the minimum pay to $15 at the end of 2020.
Target also announced other attempts to allow it to speed up deliveries and earn purchasing its stores easier. The business is rolling out loose, two-day delivery for hundreds of thousands of things on Target.com. Except for holders of its own branded credit card, shoppers formerly had to spend at least 35 to get free delivery. And its same-day shipping assistance, which was analyzed New York City, is being rolled out to major cities in the U.S. such as Boston and Chicago. Target, which was testing curbside pickup 50 shops, said it also intends to expand to 1,000 locations nationally.
“2017 was a year of substantial advancement,” Cornell said. “2018 is all about speed.”
Target gained $1.1 billion, or $2.02 per share, in the fourth quarter, compared with $817 million, or $1.45 per share, a year before. Earnings, corrected for one-time earnings and prices, were $1.37 per share, which will be two cents short of analyst projections, according to Zacks Investment Research.
Revenue climbed 10 percent to $22.77 billion, edging expectations for $22.46 billion.
Target reported a 3.6 percent growth in earnings at stores opened at least a year. That defeat quotes of a 3.1 percent gain, according to FactSet. Same-store sales, a vital barometer in the market, climbed more than 4 percent in January, indicating that Target’s conversion is renewable.
Client traffic climbed 3.2 percent and internet sales jumped 29 percent in the fourth quarter. The business logged healthy sales growth in most of its merchandising areas, including fashion and home furnishings.