Target announced earlier this week that it plans to spend about $3.5 billion on capital expenditures in 2018 (compared to $2.5 billion last year) as it accelerates investments in store remodels, small-store formats and other initiatives.

The company also reported that the investments will likely have an adverse affect on profit margins. Target execs said that they expect to generate a lower operating margin in the near term as they continue to increase wages and upgrade its stores and supply chain to better accommodate its growing e-commerce business.

Regarding Target’s e-commerce efforts, the company unveiled free two-day shipping on hundreds of thousands of items and plans to offer same-day delivery through Shipt, which it acquired last year, in most major markets by the end of this year.

Shipt is currently available to deliver from 455 Target stores. Target said Shipt also plans to continue to expand its partnerships with other retailers, including Costco, Publix and others.

Following up on the “nearly 30” small-format stores opened in 2017, Target said it plans to open about 30 more in 2018 and another 30 in 2019.

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