TARGET TO ADJUST BUSINESS MODEL AFTER DISAPPOINTING EARNINGS
Minneapolis-based Target Corporation has announced its fourth quarter and full-year 2016 results. The company reported GAAP earnings per share from continuing operations of $1.46 in fourth quarter and $4.58 for full-year 2016, compared with $2.31 and $5.25 in 2015, respectively.
Fourth quarter 2016 sales decreased 4.3 percent to $20.7 billion from $21.6 billion last year, reflecting a 1.5 percent decline in comparable sales combined with the removal of pharmacy and clinic sales from this year’s results. However, comparable digital channel sales grew 34 percent and contributed 1.8 percentage points of comparable sales growth.
“Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores,” said Brian Cornell, chairman and CEO of Target.
Looking ahead, Cornell noted: “We will accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day. While the transition to this new model will present headwinds to our sales and profit performance in the short term, we are confident that these changes will best-position Target for continued success over the long term.”
As a result, first quarter 2017, Target expects a low-to-mid single digit decline in comparable sales. For full-year 2017, Target expects a low-single digit decline in comparable sales.
