On Wednesday, Target Corp. reported the company's sales has increased 2.1 percent in the most recent quarter. However, comparable sales grew sluggish and its e-commerce sales growth was far below Target's own goal. And even though the company has been focusing on revamping, the sales figures still suggest that Target still has some work to do as it indicates early signs of a reversal.
Throughout its 1,805 U.S. stores, Target Corp. has been concentrating in improving its product offering and display merchandise in more attention-grabbing ways. According to The Orange County Register, the company's strategic schemes, which include revamping of its kids apparel and wellness-oriented food items, appears to be beneficial in raking stronger sales. Since they are focusing more in the style, baby, kids and wellness categories, the retailer's sales rose 2.5 times faster in these areas than the company average.
Target Corp. has increased the lower end of its profits forecast for the year thanks to the optimism of CEO Cathy Smith on how sales will shape up in the crucial holiday season. Unfortunately, the company's stocks plummeted 4 percent by the end of Wednesday to $69.78, citing the reason that perhaps investors found some weak spots on the results.
Another culprit revealed is the fact that Target's online sales only grew 20 percent in the quarter, far below than the company's ambitious 40 percent growth rate that its executives have set as a goal for the next few years, St. Louis Post Dispatch noted. The figures are a slowdown from the 30 percent online growth the retailer posted in the second quarter and 38 percent in the first quarter.
"This performance was well below our expectation," Smith said on a conference call with reporters.
As for the fourth quarter, Target forecast online sales to continue that same 20 percent clip, even with a free shipping promotion on any size order through the holidays, which helped drive a big increase in online sales last year.
"We believe Target is making the right investments and improving its online presence but the slowing digital sales growth is discouraging," Piper Jaffray analyst Sean Naughton said.
Target chief executive Brian Cornell has also suggested on Wednesday that analysts take the online slowdown in context. This holiday season, the National Retail Federation expects online sales to rise between 6 and 8 percent.
"We're seeing an overall slowdown in digital growth across retail," he said. "And we're really pleased that we continue to outpace the industry."
Meanwhile, Target had announced a restructuring plan in March to remove several thousand corporate jobs and revamp grocery operations. As per Brainerd Dispatch, the plan also included a $1 billion investment in technology in areas such as supply chain, and the company is concentrating on improving stock levels in stores.
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