Profit in Fourth Quarter at Target Misses on Discounting

The heavy discounting by Target during its holiday shopping season squeezed the profits during the fourth quarter. However, it’s new trendy assortments as well as spiffed up store presentations helped attract more shoppers who spent more.

The retailer, based in Minneapolis offered an outlook that was upbeat helping send its share higher by as much as 3%.

The latest results released on Wednesday show Target made solid progress in winning back its shoppers. It started an aggressive plan to regain its status as cheap chic during 2014 under Brian Cornell its new CEO, after a number of setbacks that hit the headlines.

Those setbacks included a major credit and debit card data breach that hurt sales as well as profits for a number of months.

Under CEO Cornell, Target rid itself of its Canadian operations that were losing money and shook up its executive ranks of leadership.

During the U.S. recession the retailer appeared to have lost its mojo when focus at the business shifted to a larger grocery section. It seemed as though it was slower in moving ahead of style trends than in the past.

Target this past holiday shopping season was in a battle with Walmart and Amazon through heavily discounting its goods and bringing back online free shipping.

Traffic in its stores increased and sales online surged by 34%, after sales online jumped 30% during the previous quarter.

The moves by Target helped to drive sales in comparable stores up 1.9%, which was the sixth straight increase by quarter, Customer traffic increased as well for the fifth straight quarter.

During the same three-month period, Walmart recorded a 0.6% rise in U.S. store revenue at its stores opened 13 months or more.

Global Walmart online sales were slower by 8% during that same period.

Target posted earnings of $1.43 billion, which was equal to $2.32 a share for the quarter that ended on January 30.

That is in comparison to a $2.64 billion loss, which equal $4.10 per share for the same period but one year ago. At that time, the company had incurred massive charges related to the shuttering of its business across Canada.

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David Glass

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