The deals are paying off for Target. When reporting better-than-expected third-quarter earnings on Wednesday, the 1,800-unit chain noted that recent marketing geared to value has been successful. That promotional tone is expected to continue through the holiday season, when the Minneapolis-based retailer will increase its value-based messaging. This year, 60% of its holiday messaging will be value-based, 20% more than last year, according to executives.
On a third-quarter conference call, Chief Executive Brian Cornell noted that earlier this year, Target began to "fall short in communicating value," but such imbalance was rectified in the third quarter, when the brand increased its value-based marketing. "We believe those changes were instrumental in driving improved traffic and comp sales in the third quarter," he said. "Going forward, we are committed to striking the appropriate balance in all of our marketing communications."
For the quarter ended Oct. 29, Target reported sales of $16.44 billion, down 6.7% from the $17.61 billion reported in the year-earlier period. The decline was partially due to the sale of the company's pharmacy business to CVS last year. Yet favorable back-to-school sales from the fall spurred Target to increase its fourth-quarter forecast to a same-store sales range of -1% to 1%; the company had previously predicted same-store sales would be -2% to flat for the quarter.
Target executives expect that its already successful new in-house children's apparel line, Cat & Jack, Star Wars Rogue One products, and Disney Princesses like Frozen's Elsa will be standouts for gifts this year. The company has added more than 1,800 new and exclusive toys, 15% more than last year.
Last month, the retailer debuted a holiday campaign from 72andSunny, Target Creative and Team Arrow that ramps up the chain's TV offering in an effort to better serve Hispanic customers. Target spent $128.9 million on measured media in the U.S. between November and December in 2015, according to Kantar Media.