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Holiday Sales Lift Target's Fourth-Quarter Profits

'Outstanding' Creative and Digital Support Grabbed Consumers, CEO Says

By Published on .

Target, recovering from its failed expansion into Canada, posted earnings for its fiscal fourth quarter that topped analysts' estimates, lifted by a holiday sales gain.

Though a $5.1 billion writedown of its Canadian operations led to a net loss, Target's operating profit exceeded projections. Same-store sales measuring comparable transactions gained 3.2% in the period, which ended Jan. 31, the Minneapolis-based company said Wednesday in a statement.

The gains were driven by strong sales in style, baby, kids and wellness, an increase in digital marketing, as well as an industry factors like improved consumer confidence and lower gas prices.

"The consumer, we do believe, is healthier, and we're pleased that they are spending an our stores," said Chairman and CEO Brian Cornell, in a statement. "But also think we made significant strides from a merchandising standpoint. We had terrific marketing and a great digital connection with our guests."

Target invested more heavily in marketing technology during the quarter, which contributed to a 2.8% rise in operating expenses.

Target spent $1.70 billion on U.S. measured-media in 2013, according to the Ad Age DataCenter.

"As we continue to make sure we are connecting with our guests, connecting with them in the way they are looking to connect with the Target brand, digital is going to play an increasingly important role," said Mr. Cornell during an earnings call.

Mr. Cornell declined to elaborate on the call, but said that Target would provide more details during an investor meeting next week. He added that Target is pleased with the results so far.

"We created growth through the clutter," said Mr. Cornell."We had some outstanding creative that received very positive response from the guests, and we complemented that with a very strong digital campaign."

Kathryn Tesija, exec VP and chief merchandising and supply chain officer at Target, also highlighted the retailer's venture into Snapchat earlier this month as an example of its efforts to engage guests in new and creative ways.

-- Contributions from Bloomberg News --

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