Discount giant Target plans to open more than 300 new stores, mostly full-sized brick-and-mortar locations, bucking a national trend after mounting a drive to roll out smaller-format sites.

Brian Cornell, the chain's chairman and CEO, on Tuesday said Target sees more opportunity in debuting full-size stores now. The coming additions to Target's store fleet are expected to generate $15 billion in incremental sales annually, according to Cornell.

“Over the last couple of years, you’ve seen us move from a focus on small stores ... to more larger-sized stores as we see new opportunities ... where we haven’t competed in the past," Cornell told analysts during an investor day event. "And we’ve been very pleased with the performance of these new full-size stores. ... So we’re excited about the pipeline. It will be more larger-size stores. There will be a broader food offering."

Minneapolis-based Target doesn't intend to abandon the small-store format but plans to judiciously keep opening some to be in urban areas and near college campuses, according to company officials. The retailer also announced that over the next 10 years it will invest in improving most of its nearly 2,000 stores, with projects such as full remodels, adding Ulta Beauty locations, upgrading fixtures and supporting same-day delivery services.

Target's pullback on small-format locations comes as other retailers are avidly pursuing rolling out downsized stores to penetrate markets. Whole Foods Market, owned by online giant Amazon, on Monday, said it was debuting a small-format grocery store in Manhattan with plans to roll the format out nationally. And Macy's last week said it planned to accelerate the expansion of its small-format namesake stores as well as Bloomingdale's.

Target's small-format stores are generally under 50,000 square feet, or about a third of the size of a traditional store. The retailer held its investor event in New York City, and Cornell credited Target's presence in the the Big Apple to small-format stores.

“Ten years ago, we really didn’t have a brand presence in Manhattan," he said. "Today, we have over dozen locations and we’re in many of the neighborhoods across the city.”

Small-format locations also allow Target to operate near college campuses, building a connection with young people who will hopefully become lifelong customers, according to the company. The smaller stores have also given Target lessons about how to choose the right merchandise assortment to reflect demand in local markets, officials said.

“We feel really good about the returns of the small" stores, said Michael Fiddelke, Target's chief operating officer and chief financial officer. "And it’s great to have that flexibility kind of of our toolbox, of what’s the right thing to build for the opportunity in a specific market. And to be clear, going forward if the right opportunity can be fulfilled with a 25,000-square-foot box that brings us closer to a college campus or an urban center, we know how to do that. We like the returns and we’ll lean in there.“

Nonetheless, larger stores are "where we expect the turbines to be strongest" and will represent the largest component of the 300 new stores, according to Fiddelke.

“As Brian mentioned, most of these new stores will be larger on average than we’ve opened in recent years," he said, adding that with the new batch of brick-and-mortar locations Target will be “meaningfully extending our reach into new neighborhoods.”

As of Feb. 3, Target had 273 stores that were 170,000 or more square feet; 1,542 stores that were 50,000 to 169,999 square feet; and 141 stores that were 49,999 square feet or less.

Target discussed its fiscal fourth-quarter earnings at its meeting, and it was a mixed bag as cost-conscious consumers watched their discretionary spending. Quarterly revenue was up nearly 2%, to $31.9 billion for the span ended Feb. 3. Profits in the fourth quarter rose substantially. But the company’s annual revenue dropped for the first time since 2016 last year, to $107.41 billion, a 1.6% decrease from the prior year.

Capital expenditures in 2023 were $4.8 billion, with 21 store openings. They will decrease this year, from $3 billion to $4 billion.

"The most pleasing aspect of Target’s fourth-quarter results comes from the bottom line, where net income rose by 57.8% over the prior year," Neil Saunders, managing director of GlobalData, wrote in a note to clients. "The revenue weakness reflects the broader economic trend of Americans cutting back on non-essential spending which has hit Target, with its discretionary offer, particularly hard. This is especially so at stores where comparable sales dipped by 5.4% as fewer people visited and those that did visit put fewer things into their cart. Unlike Walmart, Target’s grocery offer is not able to offset the weakness by pulling in more shoppers."

Target didn't immediately respond to an email from CoStar News seeking a comment on Saunders' remarks.

As part of its effort to boost the company, Target said next month it will launch a new membership program, Target Circle 360. It will debut with a discounted price of $49 a year and includes unlimited free same-day delivery for orders over $35 in as little as an hour with no delivery fees or markups, free two-day shipping and other benefits.