Dive Brief:
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Target saw a 1.9% increase in same-store sales in the fourth quarter, the company reported Wednesday. But its sale of its pharmacy business to CVS also dinged total sales, which fell 0.6% year-over-year to $21.6 billion from $21.8 billion, missing expectations of $21.75 billion.
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Same-store sales were helped by Target's baby, kids, style, and wellness categories, which grew more than three times faster than the company’s Q4 average. Traffic in stores also grew 1.4%.
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E-commerce sales rose 34% in the quarter, contributing 1.3 percentage points to same-store sales growth, thanks in part to its holiday season free shipping policy, Target said.
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For full-year 2015, same-store sales rose 2.1% and same-store traffic increased 1.3%.
Dive Insight:
Target’s results include a great mix of influences, from its sale of its pharmacy business to lingering effects of its mammoth 2013 data breach. But the retailer's turnaround efforts under CEO Brian Cornell seem to be having a real impact
His approach of focusing on key categories looks to be quite effective, and the company's 34% e-commerce growth is notable, especially when compared to Wal-Mart’s more tepid 8% e-commerce growth in the same period. This dominance over Wal-Mart also showed in Target's same-store sales, with Target posting a 1.9% rise compared to Wal-Mart's 0.6% growth. Cornell's efforts to attract more customers to stores, which includes ramping up its displays and clothing selection as well as push in-store pickup for online orders, seems to be paying off.
Target recently released a new line of gender-neutral decor for kids, and has been focusing on key grocery departments in an effort to attract more millennial customers. The latter strategy is similar to Wal-Mart, which has also made revamping its grocery offerings a priority.
Indeed, Cornell crowed about the company’s improvement in a statement Wednesday.
“With traffic growing for five consecutive quarters and our signature categories of Style, Baby, Kids, and Wellness leading our growth, Target’s results demonstrate that we are focused on the right strategic priorities,” Cornell said.
