Minneapolis -- Target Corp. reported Thursday that profit for the quarter ended Jan. 28 slid 5.2% to $981 million amid heavy holiday promotional activity. But the chain is still forecasting a full-year profit outlook that beats analysts’ expectations.
Revenue for the fourth quarter increased 3.3% to $20.94 billion, missing Wall Street’s expected $21.23 billion in revenue. Same-store sales rose 2.2%, below Target expectations.
On a conference call with analysts, Target CEO Gregg W. Steinhafel said that the pace of sales after the holiday period has returned to stronger, pre-holiday levels, and sales momentum has built, particularly in discretionary categories.
The chief executive told analysts Target expects to complete some 230 remodel projects in 2012 as it continues to add perishable food along with a deeper assortment of dry, dairy and frozen items and enhanced store layout and presentation in areas including apparel, home, beauty, shoes and baby.
In addition, the chain will open 20 to 25 stores in 2012, adding 15 to 20 locations, net of relocations and closures. The total includes five stores under the chain’s new urban banner, CityTarget, which will debut in July.
“While these slightly smaller urban stores will incorporate the Target brand and store experience, we'll tailor our assortment to meet the needs of the trade area and adapt our operating routines to work in smaller spaces with higher traffic,” Steinhafel said on the call.
Looking further ahead, Steinhafel said the chain will take time to learn from the initial CityTarget locations before it determines the appropriate pace of investment and number of additional CityTarget stores it will open.
“In addition, we'll apply what we learn in these pilot stores across the chain in our larger U.S. stores and in Canada,” he said.
Target remains on track with strategies to ramp up traffic and sales, including teaming with specialty shops to offer limited-edition merchandise and partnering with Apple to test displays of its products in 25 Target stores.
For the full year, we grew our comparable store sales by 3%, our best annual performance since 2007. This growth reflects investments made in our remodel program and the 5% Rewards loyalty program, both of which continue to drive incremental traffic and sales.