Why Target is hiking its minimum wage to as much as $24 an hour
It's just a good business decision to keep on raising hourly wages for workers as it will help retain the top talent that is driving strong sales and profits, explains Target CFO Michael Fiddelke.
Target said this week it would lift hourly wages for workers in distribution centers, stores, etc. to $15 to $24 an hour depending on location and position. The total investment will amount to $300 million. The discounter revealed back in 2017 a desire to increase its minimum wage to $15 an hour by 2020, which it achieved.
"All of that is an investment in the team to deliver the exceptional experience that's driving growth. And right now that's serving us well," Fiddelke said on Yahoo Finance Live. "We track things like the metrics around our ability to attract and retain a great team. And those metrics look for us stronger today than they did pre-pandemic. And so those investments are paying off, and the team is paying off that investment with their support of the growth we see."
That virtuous circle of happy, well-compensated retail employees — not unlike the model Costco has long pioneered — leading to strong financials does appear to be in place at Target.
The company said Tuesday fourth quarter comparable store and online comparable sales rose 8.9% and 9.2%, respectively. Earnings of $3.19 a share beat analyst forecasts for $2.88 a share.
Target's stock popped 12% on the session.
"The quarter was driven by traffic. So that means consumers voted with their feet and their clicks and picked Target more often. So that's an incredibly healthy sign for our business," Fiddelke added.
The company also outlined "long-term" high single-digit percentage EPS growth. The Street had been modeling for about 8% EPS growth in each of the next three years.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit
