Target is making progress at wooing more customers
Target’s plan to pull shoppers into stores is showing progress, even as it struggles to keep them from ordering through Amazon.
The chain said Tuesday that it attracted more customers over the holidays by revamping some of its stores, upping its online delivery service and offering exclusive brands and collections.
That strategy appeared successful as sales rose 3.6% in the final three months of 2017 compared to the same period the year before. Its online sales were also higher, soaring 29% in the period, although that compared to growth of 34% in the previous year.
But while its performance showed improvement, Wall Street remained skeptical as earnings per share slipped and missed analysts’ expectations.
Adjusted earnings fell during the quarter to $1.37 a share from $1.45 last year, a penny shy of expectations from analysts with S&P Global.
That seemed to worry investors, who sent the retailer’s stock price down about 4.5% to close at $71.79 on Tuesday.
Target executives, however, were encouraged.
“Our progress in 2017 gives us confidence that we are making the right long-term investments to best position Target for profitable growth in a rapidly changing consumer and retail environment,” Target CEO Brian Cornell said in a statement.
The retailer generated $1.1 billion in revenue during the full quarter, up 34.1% from the $821 million it reported the previous year.
Target made eight of a dozen new, exclusive brands available during the holiday season, including Hearth & Hand with Magnolia, a home-goods collaboration with Chip and Joanna Gaines, the popular hosts of the TV show Fixer Upper.
And the retailer, known for its collaborations with designers like Victoria Beckham and Lily Pulitzer, is launching its newest limited collection, Hunter for Target, in April.
It’s also chasing customers who’ve grown used to the convenience and speed offered by Amazon and other ecommerce sellers, recently buying online delivery company Shipt for $550 million.
That investment will enable most of Target’s customers to have groceries dropped at their doorsteps. The sameday service is likely to be available at nearly all of Target’s roughly 1,800 stores by the end of this year.
And even though it’s shedding underperforming stores, it has added new, smaller-format locations on college campuses and in urban centers that are appealing to shoppers by offering more curated collections.
In fact, Target opened 32 stores in 2017, creating 2,000 jobs.