MINNEAPOLIS — Increased reliability and waves of innovation are central elements of a strategy at Target Corp. to take its food and beverage business to the next level, according to top executives at the Minneapolis-based retailers.

Elements of the company’s food and beverage strategy, including its growing digital business, were discussed March 4 in an investment call with analysts after the company issued financial results for the 2024 fiscal year.

Food and beverage sales at Target in the year ended Feb. 1 were $23.83 billion, down slightly from $23.9 billion. Adjusted for the 53rd week in fiscal year 2023, sales in fiscal 2024 were up slightly. In the fourth quarter, food and beverage sales were $6.52 billion, down from $6.77 billion. Similarly, fourth-quarter sales in fiscal 2024 were up from the year before, adjusted for a 14th week in the fiscal 2023 fourth quarter.

Rick Gomez, executive vice president and chief commercial officer, said strength in the food and beverage business together with growth in essentials and beauty have made Target the “fifth largest frequency player in US retail.” He highlighted two priorities as necessary to “drive these businesses forward.”

Improvement in reliability, especially in food and beverages, headlines the priorities, Gomez said.

“This is a business that has grown by almost $9 billion over the last five years,” he said. “And during that time, Target has become the fifth biggest digital grocer in America.”

With demand expanding, Target has opened three new food distribution centers over the last two years, expanding the company’s network to eight facilities nationwide. A ninth is slated to open in 2026.

“And while we’ve made big strides with in-stocks, we know that high in-stocks on average are only part of the equation,” Gomez said. “There is still an important opportunity for us during peak shopping periods, including Sunday afternoon and weekday evenings, because these are times where being out of stock on a key item can cost sales on related items or even the entire trip.”

Product innovation represents another key to sustaining growth in food and beverages, and Target’s pipeline is robust, Gomez said.

“We’re focused on delivering the kind of consistent newness that has helped transform these categories,” Gomez said. “That will be led by our flagship food and beverage owned brand, Good & Gather, which is one of the biggest and fastest-growing grocery owned brands in the US and on the brink of becoming Target’s first $4 billion owned brand.”

Gomez estimated that 600 new items will be added this year under the company’s Good & Gather brand as well as its Favorite Day dessert brand.

“To put that in perspective, for many CPG brands, a dozen new items represents a big year,” he said. “But for our food and beverage team, that’s what we’ll average in one week. And I am proud to share that today, we’re bringing the design-style partnerships that Target is known for to food and beverage through a series of Good & Gather collaborations.”

One such collaboration is a new product developed with Ann Kim, a James Beard award-winning chef.

“It sets at almost 1,800 stores nationwide next week, starting at just under $7,” Gomez said. “We’ll have seven items from Chef Ann with flavors representing her Korean heritage, including four frozen pizzas in styles that she's made famous in her Minneapolis restaurant, Pizza Ria Lola. This is another example of delivering everyday discovery and delight in our grocery aisles, a big step forward in our journey to make Target a retailer that doesn’t just sell food but celebrates food.”

Expanding on how digital technology will build sales at Target both in food and other categories was Carl Sylvester, executive vice president and chief guest officer.

He said Target is the first retailer to integrate into Apple Car Play, a service also available through Android Auto.

“Using these car-based technologies, guests can now let their local Target team know they’re on their way to pick up their drive-up order,” Sylvester said.

Thanks to investments made to enhance customers’ digital experience, 20% of Target volume current results from digital sales, Sylvester said. Food and beverage is a major part of this business, he added.

“We're punching well above our weight in categories like food and beverage, helping with dinner tonight or even just stacking the pantry without ever having to get out of your car,” he said. “Drive up and same-day delivery have been game changers for so many of our guests and have helped propel us to one of the nation's top five grocers, well ahead of many traditional grocery stores in the US.”

Target Corp. net income in fiscal 2024 was $4.09 billion, equal to $8.89 per share on the common stock, down 1.1% from $4.14 billion, or $8.94 per share, in fiscal 2023. Sales were $106.6 billion, down 0.8%. Fourth-quarter net income was $1.1 billion, or $2.42 per share, down 20% from fiscal 2023. Net sales were $30.92 billion, down 3.1%. Based on the company’s estimate of the impact of the extra week in 2023, full-year net sales increased approximately 1% and earnings per share rose 3%, on a 52-week basis.