Target happy with home's performance

HTT Staff -- Home Textiles Today, 11/15/2012 12:48:40 PM

Minneapolis - Among discretionary categories, home's strong comps led the way during Target Corp.'s third quarter, especially in seasonal and housewares. Now the chain is working to boost momentum with several initiatives designed to drive more business within home.

Kathryn Tesija, evp, merchandising and supply chain, said during Target's earnings call this morning, "We are very pleased with our exclusive Nate Berkus collection," which spans bedding, bath, accessories, lighting, rugs and window treatments, "and this collection will be ongoing with new items added in 2013."

Target is also pleased with the launch of its new house brand in home, Threshold, which currently consists of linens and accessories. New product categories are set to rollout through 2013.

Target's back-to-school/back-to-college programs proved strong, "key drivers of sales in the quarter," she added.

Coming up for the holidays, new gift items in home will include boxed offerings.

As 2013 approaches, Target is gearing up for the spring opening of its first Canadian units, with 124 stores to begin rolling out in spring. There are 45 existing sites now being remodeled, one distribution center in operation, and a second DC coming online soon.

Back home in the U.S., the chain's newest format, CityTarget, is also a point of focus going forward. With five locations in four major metropolitan cities - Chicago, Los Angeles, San Francisco and Seattle - Target plans to open three more in 2013.

"We are very excited about our initial results in the new CityTarget stores," said Gregg Steinhafel, chairman, president and ceo. Tesija said the stores have enjoyed strong traffic and sales, and are attracting "a younger and more affluent shoppers than we see across chain."

For this holiday season, Target has its bullseye squarely fixed on the online and mobile channels, as shoppers are increasingly use the web and their hand-held devices to research and make purchases from the retailer.

As part of its effort to extend its high-tech reach and capabilities, Target recently rolled out free WiFi in its stores, and "we continue to invest meaningfully in resources online and for mobile," Steinhafel added, "to integrate the shopping experience across all of our channels."

Target is expecting the holiday season to produce stronger sales than last year, but sees shoppers still guarded about spending. Tesija noted, "Our guests are still shopping with discipline," using lists and only occasionally "splurging" on special items.

"This holiday, they will spend slightly more than last year, but they will focus on value and promotions," she said, later adding, "We are positioning our inventories appropriately."

Net income for the third quarter ended Oct. 27 rose 14.8% to $637 million, or 96 cents per share, beating expectations. The figure includes a 15% gain from the pending sales of Target's credit card receivables business. Stripping that out, EPS was 90 cents.

Sales for the 13 weeks increased 3.4% to $16.6 billion, with comps up 2.9%.