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Target starts crawl to recovery post-breach in Q1
Minneapolis – Ramping up “irresistible” promotions across multiple categories and working to improve security on its REDcard credit card, Target spent much of its first quarter trying to win back shoppers’ trust and spending dollars following its late 2013 data breach.
Kathryn Tesija, evp, merchandising and supply chain, noted in the company’s earnings call this morning that while business during the recent first quarter, “lingering effects of the data breach” remain, according to fresh consumer research conducted by the company. Those factors bruised the retailer during the quarter.
“Trust measures have improved, but we need to make more progress to restore them to pre-breach levels,” she said.
To achieve that, Target has myriad efforts lined up for the second quarter and throughout the year for both its U.S. and Canadian segments, as well as online and especially digitally.
These include: enhanced customer service, more special deals and promotions in all departments, and an enhanced mobile platform – the latter of which will encompass more sorting options, a save-for-later mobile shopping basket, better visibility to in-store capabilities, a more streamlined mobile checkout and others.
“About two-thirds of our [online] traffic right now comes from mobile,” Tesija noted.
Net earnings fell 16.1% to $418 million, or $0.66 per share during the quarter.
0.2% to $16.7 billion, reflecting the contribution from new stores partially offset by a 0.3% decline in comparable sales.
In Canada, the company generated sales of $393 million, compared with $86 million in first quarter 2013 when Target first opened its first 24 Canadian stores.
John Mulligan, interim president and ceo, and cfo, said the U.S. and Canadian performances were in line with expectations.
Tesija added that improvement efforts in the first quarter produced “mixed results,” but were “meaningfully better than in the fourth quarter.”
By department, hard-lines – electronics and mobile products, in particular – was the strongest performer. Consumables, home and apparel all suffered small comp declines.
However, in the realm of digital sales the strongest Q1 categories were home and health & beauty products.
“Our digital [shopper] visits are up more than 20% from a year ago, and our share of visits from mobile phone or tablet continues to grow.”
The company has updated its 2014 earnings expectations to reflect the impact of the various investments it is making going forward to support growth.
In second quarter 2014, the company expects adjusted EPS, reflecting operating results in its U.S. and Canadian segments, of 85 cents to $1.
For full-year 2014, Target now expects adjusted EPS, reflecting operating results in its U.S. and Canadian segments, of $3.60 to $3.90, compared with prior guidance of $3.85 to $4.15.
Source: Home Textiles Today