Is Target (NYSE:TGT) about to slash IT spending? No, it turns out, it's not. An investors' note from Citi analyst Deborah Weinswig on Friday (June 21) said Target has reached "peak spending" on IT and next year the IT budget will drop from the range of $130 million to $160 million down to between $30 million and $60 million. That would be $100 million, or about two-thirds of Target's IT spend, chopped from the budget.
But on Thursday (June 27), Citi reissued that investors' note at Target's prompting, because in reality Target's IT spending will actually rise next year. It seems there was a communication problem between Target's top executives and Citi. The new version of the note reads: "TGT is investing approx. $0.20-$0.25 per share more in technology this year than last year. Next year, the incremental spending on technology is expected to be worth $0.05-$0.10/share YOY." No slashed IT budget. No wild swing between investing in new systems and digesting the results. In short, a much more conventional IT budget story. But wait—what if Citi had gotten it right the first time? Could that even have worked?