Target Plans ‘Overt’ Value Messages

MINNEAPOLIS — Target Corp. [5] here said its investment in Canada resulted in a decline in net income for the third quarter, and the company pledged to be highly competitive on price for the holiday season.

“In the U.S., it’s clear that the holiday season will be highly promotional and that consumers will be laser-focused on value,” said Gregg Steinhafel [6], chairman, president and chief executive officer, in a conference call with analysts. “In past holiday seasons, we have consistently offered compelling value, investing billions of dollars in low prices, yet we believe we have an opportunity to communicate this focus on value more clearly to the marketplace.

Gregg Steinhafel, chairman, president and CEO, Target
Gregg Steinhafel [6]

“As a result, this holiday season, we will be much more overt in our price messaging across our marketing vehicles, stressing … everyday low prices, deep discounts on promotions, price match policies and the 5% REDcard Rewards program.”

Kathryn Tesija, executive vice president, merchandising and supply chain, said the company would be following up on the success of its recent exclusive offer of Pumpkin M&M’s with “a wide variety of big-brand holiday treats, including exclusive items from M&M’s, Oreo and Hershey.”

She also said the company was pleased with the initial response to its store pick-up program, which became available in all U.S. stores on Nov. 1.

In addition, Tesija said the company had a “strong [customer] response” to its test of the Baby 360 layout, which features added service and an enhanced presentation. Target extended the test to an additional 20 stores across the country.


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Target also said it is extending its Beauty Concierge program to another 95 stores in new markets across the country, including New York, New Jersey, San Francisco and Dallas/Fort Worth.

“This program is exceeding its sales goals and we’re seeing particular strength in core categories, like cosmetics, skin care and hair care,” Tesija said.

Target said its net income for the quarter, which ended Nov. 2, fell 46.4% to $341 million, and sales increased 4% to $17.3 billion. For the year-to-date, net income declined 28.8% to $1.5 billion, while sales were up 3% to $51.1 billion.

In its U.S. segment, Target said sales rose 2% to $16.9 billion for the quarter, including an increase of 0.9% in comparable-store sales, while sales in the new Canadian segment were $333 million. For the nine-month period U.S. sales rose 1.6% to $50.4 billion.

Read more: Target Plans to Slow U.S. Growth: Report [8]

According to Steinhafel, “Third-quarter financial results reflect continued strong execution in our U.S. segment in an environment where consumer spending remains constrained. In our Canadian segment we are focused on improving performance as we transition from opening to operating our 124 stores.”

John J. Mulligan, executive vice president and chief financial officer, said U.S. comp trends were softer than expected in October “as consumers witnessed the dysfunction in Washington.  However, this weakness was offset by the calendar shift, which moved a meaningful amount of Halloween sales into the third quarter.”

He also said transactions in the quarter were down 1.3%, which was “more than offset” by a 2.2% increase in average transaction size.

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