March 1 (Reuters) – U.S. retailer Target Corp (TGT.N) posted record holiday quarter profit on Tuesday and forecast an upbeat 2022 as it expects supply chain pressures subside later in the year, increasing the shares by 14%.

Margins remain front and center for investors this earnings season, with major retailers spending heavily to speed up shipments and hiring thousands more people to overcome bottlenecks and ensure well-stocked shelves.

“We see supply chain constraints are steadily resolving but will likely take longer (…) made more uncertain by the crisis in Ukraine (following the Russian invasion),” the director said. General Brian Cornell during an earnings call.

Minneapolis-based Target said raising prices would be the last lever it would pull to combat rising costs, but expects profits to improve later this year as sales are boosted by new online options and same-day delivery.

Same-day businesses, which allow shoppers to walk into a store and pick up goods in minutes or have them delivered in hours, grew 45% in 2021, the company said.

The big-box chain said it would invest up to $5 billion this year — up from the $4 billion it planned for 2021 — to remodel stores, open more midsize outlets and improve its online activities in order to maintain sales momentum.

NO SLOW DOWN

Target and Walmart’s (WMT.N) sales have surged during the pandemic, and retailers are building on those gains by using their scale and bargaining power with suppliers to undercut smaller rivals with competitive pricing and win market shares.

“Retailers who were able to mitigate supply chain issues and all the headwinds gained an edge over mom and pop stores,” said Jessica Ramirez, retail analyst at Jane Hali. & Associates.

Target expects revenue growth in the mid-single digits in fiscal 2022, compared to estimates of a 2.18% increase. He expected adjusted earnings to rise by high single digits, above estimates of a marginal increase.

Reporting by Aishwarya Venugopal and Uday Sampath in Bengaluru and Arriana McLymore in New York; Editing by Sriraj Kalluvila and Andrew Cawthorne

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