Target Leveraged Stores to Up Its Online Game, and It Worked

Target is a Minneapolis-based company. Photo: KSTP/File
Target is a Minneapolis-based company.

January 09, 2018 11:07 AM

Target leveraged its stores as delivery centers, helping to boost holiday sales during the critical November and December period.

The Minneapolis retailer said Tuesday that sales at stores open at least a year jumped 3.4 percent in November and December, with heavy traffic on the company's website and in stores.


RELATED: Target Aims to Boost Same-Day Delivery by Acquiring Shipt

Target stores played a part in 70 percent of online volume during the last two months of the year, accounting for about 80 percent of the company's same-store sales growth. The stores were used to either ship online orders, or as a pickup point for customers who ordered online.

Chairman and CEO said that Target's stores are at the center of a strategy to make shopping more effortless for customers.

"We are very pleased with our holiday season performance, which reflects the progress we've made against our strategy throughout the year," Cornell said in a prepared statement.

RELATED: Target Joins Other Retailers in Offering Voice Shopping

The company, also citing recently-enacted federal tax changes, raised quarterly and 2017 profit expectations, sending shares up more than 3 percent in early morning trading Tuesday.

Kohl's Macy's and J.C. Penney have all reported strong holiday sales in the past week, providing strong evidence that traditional retailers are learning how to win customers over online, while leveraging the advantages of its physical locations.

RELATED: Target to Raise Minimum Wage to $11, and $15 by 2020

At the heart of the retail revival, of course, is the consumer, who is spending more freely than in past years following the recession.

On Monday, the Federal Reserve reported that consumer borrowing jumped 8.8 percent in November, the largest spike in more than two years, with confidence in the U.S. economy growing steadily. The category of debt made up mostly of credit cards jumped $11.2 billion, the most in a year, to $1.02 trillion. That is the highest level on record, without adjusting for inflation.

Like other retailers, Target has attempted to reinvent itself as shoppers increasingly go online. The company announced earlier last year that it was investing more than $7 billion to modernize its business. It's now shipping online orders from 1,400 of its 1,800 stores for faster delivery.

The company recently acquired startup Shipt, which will bring same-day delivery services to customers from about half of its stores in the early part of the year.

Target expects online sales to increase more than 25 percent in 2017.

Target Corp. now expects fourth-quarter adjusted earnings of $1.30 to $1.40 per share, up from $1.05 to $1.25 per share. For 2017, Target projected earnings of $4.64 to $4.74 per share, topping previous estimates of between $4.40 and $4.60 per share.

Analysts surveyed by FactSet expect fourth-quarter per-share earnings of $1.22, and $4.56 for the full year.

Target expects 2018 adjusted earnings between $5.15 and $5.45 per share.

Target's shares rose $2.12 to $69.30 in early trading.


The Associated Press

(Copyright 2018 by The Associated Press. All Rights Reserved.)


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