Target Q4 slips but tops Street; will open 124 stores in Canada by yearend
Minneapolis — Target Corp. reported Wednesday a profit of $961 million for the fourth quarter, down from $981 million in the year-ago period. The profit slip reflected expenses related to its Canadian market entry along with a spending slowdown during the holiday period. It was Target’s weakest holiday season performance since 2008. But its adjusted results beat analysts’ estimates and it forecast first-quarter earnings above Wall Street’s view. (For commentary on Target’s results, click here.)
“We believe these results position us well to deliver on significant plans in 2013, including completion of the largest store opening program in our company’s history with 124 stores in Canada and additional Target and CityTarget locations in the U.S., investing in new processes and technology that will improve our guests’ multichannel experience and closing the sale of our credit card receivables.” said Gregg Steinhafel, chairman, president and CEO, Target.
On a conference call with analysts, Target said it will open its first 24 Canadian stores in April, with a total of 124 locations planned by yearend. In the U.S., plans call for 15 to 20 new stores, including three CityTarget locations, and some 100 remodels.
"We expect to open many more new stores this year than in any year in our history," Steinhafel said during the call.
Target’s revenue in the fourth quarter climbed 7% to $22.73 billion, from $21.29 billion in the same period last year. Analysts forecast $22.69 billion in revenue. Industry experts said the chain’s holiday showing was partially hurt by the disappointing performance of its collection of gifts sold in partnership with Neiman Marcus. The line launched on Dec. 1, and Target sharply discounted the goods before Christmas Eve.
As previously reported, sales at U.S. stores increased 6.8% to $22.4 billion in the fourth quarter from $20.9 billion last year. Same-store sales inched up 0.4%.
"We’re pleased with Target’s fourth quarter performance, particularly in the face of a highly promotional retail environment and continued consumer uncertainty," Steinhafel said.
For the full-year, sales increased 5.1% to $72.0 billion from $68.5 billion in 2011, with a 2.7% increase in comparable-store sales combined with the contribution from new stores and one additional accounting week.
On Target: Planet Retail’s Take on Target’s Q4 and full-year results
By Sandy Skrovan, U.S. research director, Planet Retail
Target closed the books on its weakest holiday season performance since 2008, recording a paltry 0.4% same-store sales gain in the fourth quarter. Dragging down Target’s fourth quarter results were weaker-than-planned sales during the critical November/December time-frame, with 1.0% comps in November 2012 followed by a flat December compared with the same year-ago periods.
Walmart proved the victor over Target for the 2012 holiday season, logging a 1.0% increase in its fourth quarter. But Target won the year overall since, unlike Walmart, its affluent shopper base tends to be more insulated from economic swings. For the year, Target’s retail sales were up 5.1% with comparable-store sales up 2.7%.
Fortunately for Target, it ended its fiscal year on a high note, as shoppers sought post-holiday deals in January as well as a glimpse of upcoming spring fashions. Solid January comps helped prop up fourth quarter performance – ever so slightly – giving Target momentum entering fiscal 2013. The biggest initiative, by far, in the coming year will be the long-awaited launch in Canada. It’s been a long time coming, but the groundwork has now been laid and Target is set for its March 2013 debut in Canada.
New creative appointments named at Coach
NEW YORK — Coach announced that Zach Augustine will join the company as EVP, global environments, effective March 11, reporting to Reed Krakoff.
Augustine will lead initiatives across visual merchandising, architecture and creative cevelopment partnering with the other leaders to create a consistent and cohesive brand story.
Augustine joins Coach from Nike, where he held the role of global creative director – direct-to-consumer experience. Prior to Nike, he was co-founder of Winston, a consulting firm that worked with clients on projects ranging from brand identity design to retail and showroom design, development and production. He started his career in visual merchandising at Giorgio Armani and worked in creative leadership positions of increasing responsibility at Diesel, Polo Jeans, Nautica and Levi Strauss before launching Winston.
Additionally, Erin Thompson will join Coach this spring as VP artistic director, global environments.
In this role, Thompson will oversee all creative development for windows, in-store, showrooms and events, reporting to Augustine. Thompson comes to Coach from Selfridges & Co., in London, where she most recently held the position of head of visual, having initially joined the company in 2002. Prior to Selfridges, Thompson spent twelve years at Mulberry in progressively senior visual merchandising roles.
Lew Frankfort, chairman and CEO of Coach, said, “The appointments of Zach Augustine and Erin Thompson to these newly created roles are the latest steps we’ve taken to broaden our capabilities to enhance the Coach experience through product, retail environments and integrated marketing communications. This comprehensive approach to our transformation to a lifestyle brand will add excitement and cachet to Coach.”