MINNEAPOLIS — Target Corp. here said Tuesday that sales and profits were both up in the fourth quarter as consumers seem to be slowly increasing spending on discretionary items in the wake of the recession.
The company also said it expects gross margins to be pressured this year by the rollout of expanded grocery offerings in its P-fresh remodels, however, and as it seeks to remain competitive with rival Wal-Mart Stores on those items.
"We have a firm policy to be level-priced with Wal-Mart locally on like items. In our zeal to execute that strategy it drives a gross margin rate sharply lower than the average grocer because the average grocer can't compete with Wal-Mart on price," said Gregg W. Steinhafel, chairman, president and chief executive officer, Target, in response to an analyst's question during a conference call discussing fourth-quarter earnings.
The company posted a 53.7% gain in net income for the quarter, which ended Jan. 30, to $936 million. Revenues were up 3.2%, to $20.2 billion. Comparable-store sales rose 0.6%. For the year net income rose 12.4%, to $2.5 billion, on revenue gains of 0.6%, to $65.4 billion.
Read More of Today's Headlines