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Target CEO feeling pretty, pretty, pretty good about growth, holiday strategy
One almost expected Target CEO Brian Cornell to break out in a few 'ho ho hos' during a live talk Wednesday following the retailer's third quarter earnings report. Even as shares dropped Cornell is confident and happy about results.
November 15, 2017 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com
All Target CEO Brian Cornell needs is a festive Santa hat to meet his hearty enthusiasm and confidence about his company's performance come this holiday shopping season and the next fiscal quarter. And there are a few good reasons for that confidence: digital channel sales jumped 24 percent, comparable sales increased 0.9 percent and consumer traffic increased 1.4 percent in the third quarter.
But industry analysts didn't seem to care as much about those positives as they do about the few negatives from Q3, and most importantly, Target's expectations for the fourth quarter — the retailer predicts comparable sales growth of flat to 2 percent. In a press release, Cornell stated "we expect the fourth quarter environment to be highly competitive." In response, Target's shares took a noticeable dip as the market opened Wednesday morning.
In a live interview on CNBC Wednesday, Cornell said he was surprised at the market's reaction to Target's third quarter results released Tuesday, and stated, repeatedly, he is confident of growth, sales, and the company's focus to merge the physical with the digital when it comes to customer experience.
"I feel really good about our performance, so many elements working well. We had a very good quarter," said the company chairman during the CNBC live interview at a Target store in Minneapolis.
"Stores are enabling our digital performance. Stores still matter. They are still important," he replied when questioned about potential store closings and the retailer's continual refresh and deployment of small format stores in the past year.
Target recently launched a new smaller store near Herald Square in New York City, one of over 130 slated to be up and running in two years.
"We feel they will generate sales for years to come," he said, adding store remodel efforts are designed to provide guests with a great experience. "We have a great balance and they (Target's 1,800-plus stores) are still worth having," he added.
The show's analyst pressed Cornell on strategy and how it plans to compete, and beat, leading mega retailer Walmart.
"We are focused on our strategy. We're taking market share across the portfolio, we see growth share in a number of categories," said Cornell, adding that Target's move to bring in new brands is proving rewarding. The eight new brands include a home goods partnership with Hearth and Hand with Magnolia,
"We've very excited about that. We are focused on combining the physical and digital experience, and guests are telling us it's working," he added, noting the retailer has invested in value and people, hiring 100,000 workers for the seasonal push.
The new brands, the store refreshes and the digital focus are behind the company's 1.4 percent traffic increase, said the CEO.
According to a New York Times report, Target has boosted sales at each renovated store by as much as 4 percent, and the retailer now fulfills about 50 percent of its online orders from brick-and-mortar locations. In an interview with AP earlier this week, posted on ABCNews.com, Cornell said there's great opportunity to take marketshare for "well-run retailers that have great financial fundamentals who are investing in the business."
"We feel great about our entire holiday plan and have a great holiday campaign. We are making sure guests know we're a destination for gifting," he said during his CNBC appearance.
About Judy Mottl
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