On Wednesday, Target Corp. reported surprisingly better than expected Q4 earnings results, although its profit was stung by the closing of its disastrous business in Canada.
Analysts suggest that the result may reflect an unexpected turnaround of the big-box retailer after the challenges of a last year’s security breech, which resulted in the leakage of data on 40 million credit cards.
America’s second-largest discount retailer also reported a 3.8 percent higher sale volume at its locations open more than one year, which is also a better than expected outcome since the company had predicted only 1 3 percent uptick.
In addition, Target saw a 3.2 percent increase in consumer traffic and $21.8 billion sales for the final quarter, with a more than 4 percent increase than the year before. According to the company, its boost in sales is mainly due to its highly performing departments such as furniture, fashion, baby, toys, and wellness.
In September, Brian Cornell, Target’s new CEO, announced that he planned to focus more on these particular categories, which were once Target’s crown jewel, but have dimmed over time. So, it seems that Mr. Cornell had a good intuition.
“These are the categories we’re most famous for, and our guests have asked us to lead with them,”
he told investors during a conference call last fall.
On the other hand, the company reported some profit loss linked to closing down the Canada-based stores, which were a catastrophic business due to supply chain issues that often left the shelves bare, as well as lack in consumer enthusiasm. The retailer announced that it planned to resume the Canada business in six years time.
Still, although its profit was affected on a short-term while missing the Street’s expectations, the move will prove beneficial on the long run, according to analysts.
Following the Q4 earnings report, the company’s shares went slightly up to $77.35 after noon.
Mr. Cornell explained that one reason for its company boost in sales is most likely a better economy, which had greatly improved the consumer confidence. Also, lower gasoline prices are expected to further help the overall retail business, Target CEO added.
For 2015, Target wants to make additional improvements to its displays and signs, as well as to the apparel section which was equipped last year with mannequins, which consumers loved. Also, the retailer will try new set-ups for home, toy and electronics departments which will roll out in most of its stores over the course of this year.
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