Home rebounding at Target in Q4, 2013
February 27, 2013-- Home Textiles Today,
Minneapolis - Target described its shoppers as "resilient" in the face of sluggish economic growth last year - so much so that comps showed their best gains on the discretionary side of the business.
Home and apparel both posted same store sales in line with the company average during the fourth quarter, explained Kathryn Tesija, evp, merchandising and supply chain.
Although Target's overall sales fell short of the company's goal, comps exceeded expectations in four out of five departments. The discretionary businesses had low to mid single digit comp increases.
Also noteworthy about home and apparel over the period was their rapid growth in digital channels, she added.
Home's growth stemmed largely from the Nate Berkus program, which launched last fall, and the new house brand Threshold, which replaced the former Target Home label.
The Berkus line currently encompasses 150 items across home, priced from $6 to $150, and new items are being added to the offering this year.
"And throughout the spring, we will continue to rollout Threshold to replace Target Home," she continued. "The response from guests has been favorable so far."
But Tesija gave much of the overall credit for improved performance to the company's P-Fresh model, which she said has been a key driver of traffic and the reason core customers tend to increase their spend as well as frequency of visits to Target stores. The retailer's 5% RedCard program also has helped significantly in this effort, as has Target's pharmacy and its own rewards program.
The company's fourth quarter net earnings dipped 2% to $961 million, or $1.47 per share. Adjusted earnings per share were $1.65 in fourth quarter 2012, up 10.1% from 2011's $1.49.
U.S. retail segment sales increased 6.8% to $22.4 billion in the quarter, reflecting a 0.4% increase in comparable-store sales combined with the contribution from new stores and one additional accounting week.
For the full year, net earnings grew 2.4% to $2.999 billion, or $4.52 per share. Adjusted earnings per share were $4.76, up 7.9%.
Full-year sales rose 5.1% to $72.0 billion, with comps up 2.7%.
In the Canadian segment - which is scheduled to begin opening its first Target stores next month - start-up expenses reduced the company's earnings per share by approximately 18 cents in fourth quarter 2012 and 48 cents in fiscal 2012.
"We're pleased with Target's fourth quarter performance, particularly in the face of a highly promotional retail environment and continued consumer uncertainty," said Gregg Steinhafel, chairman, president, and ceo.
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