For years, Target Corp’s nationwide chain of retail stores has been a favorite for American shoppers.
In the last several years, however, low performance and a general depressed economy have taken some of the shine out of its appeal. But it may be getting back its “mojo” as evidenced by a surprise profit increase. For the third quarter of 2014, Target beat its own sales forecasts thanks to increases in housewares and fashion sales. Combined together, home and apparel sales were at the strongest level since 2012.
New Target execs take over. New CEO Brian Cornell took charge after the former chief executive was ousted. Mr. Cornell has energized managers to think outside of the traditional box and try new things. The result of testing new strategies have been very positive. For example, new apparel displays with mannequins have been implemented in 650 stores across the country, and shoppers are responding positively. There are also changes being made in the use of grocery space, which many executives worried would overshadow its core business.
The sales gain for the third quarter was just 1.2%, but it matched the largest increase in two years. Halloween season and back-to-school sales were cited as the reason for the larger numbers. Target has also recently included higher priced goods like Apple’s iPhones and pricier beauty lines Vichy and La Roche-Posay.
America’s favorite retail store? Online sales increased by 30%, which offset the decrease in brick and mortar store visitors during the quarter. It seems that Target has offset the steep decline in online ordering after a hacker attack on Target systems during last year’s holiday season. The breach released consumer credit-card and debit-card information.
Due to the sales and profits news, Target’s shares rose 7.4% to $72.50, which is its biggest one-day gain since 2009. Thanks to a slightly different approach and regained consumer trust, Target may be on its way to being America’s favorite retail store.