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Target Sharpens Edge: Expands Next-day Delivery Service

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With the objective of capitalizing on the booming online grocery delivery market, Target Corporation (TGT - Free Report) is expanding Target Restock to eight new markets. Notably, Target Restock is a next-day delivery service, which the company had launched in June. Customers opting for next-day delivery services will have to shell out nearly $5 to avail the service.

The company began this service in Minneapolis but latter on expanded it to Denver as well as Dallas markets in the month of August. Following the recent expansion, the service will now be available in Atlanta, New York, Chicago, Philadelphia, St. Louis, Los Angeles, San Francisco, and the Washington D.C./Baltimore. The service is now available in 10 markets but the company will cover San Francisco by the middle of October. We believe this is a smart move by Target, considering the increasing demand for online grocery delivery.

The Target Restock program allows customers to restock their shipping box with essential items online and get them delivered at door steps by the next business day for a nominal charge. Further, in order to improve supply chain and expand delivery capabilities, the company had acquired Grand Junction. This transportation technology company provides a platform that allows retailers, distributors and third-party logistics providers to manage local deliveries through a network of over 700 carriers.

Other Strategic Initiatives

The Zacks Rank #3 (Hold) company’s initiatives such as the development of omni-channel capacities, diversification and localization of assortments along with emphasis on flexible format stores bode well for the stock. The shares of Target have outpaced the industry in the past three months. The stock has advanced 14.9%, outperforming the industry’s gain of 7.8%.

Management plans to expand its merchandise assortments with special emphasis on Style, Baby, Kids, and Wellness categories that are performing well. Moreover, Target is also concentrating on rationalization of supply chain, technology and process improvements. These initiatives aided it to continue with upbeat performance in fiscal 2017 as reflected from impressive second-quarter results and an encouraging earnings outlook.

3 Stocks Occupying Retail’s Centerstage

Better-ranked stocks, which warrant a look in the retail sector includes, Costco Wholesale Corporation (COST - Free Report) , Tilly's, Inc. (TLYS - Free Report) and Burlington Stores, Inc. (BURL - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Costco Wholesale has an impressive long-term earnings growth rate of 9.5%.

Tilly's delivered an average positive earnings surprise of 83.7% in the trailing four quarters.

Burlington Stores delivered an average positive earnings surprise of 17.7% in the trailing three quarters and has a long-term earnings growth rate of 16.2%.

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