Target says it is confident of a successful holiday season after revealing a better-than-expected performance in the last three months.
In a conference call, CEO Brian Cornell said the company is banking on its exclusive offers – such as its "Star Wars" merchandise, a special edition of Adele's new "25" album, and an increase in hand-crafted products – and thinks they'll be a winner with shoppers from Black Friday to Christmas.
The Minneapolis-based retailer announced Wednesday it increased its in-store sales by 1.9 percent in the third quarter, and for the fourth quarter in a row it is getting more people into stores and onto its website with a 1.4 percent growth in traffic.
This growth in sales has been led by its core categories such as style, baby, wellness, and kids. Sales in those grew 2.5 percent faster than the rest of its business. Notable boosts came from sales of "Star Wars" merchandise (which helped boost toy sales by 12 percent), wearable technology (which rose 100 percent), and a 10 percent jump in local craft beer sales over the past year.
But the warm weather seen in September and October is affecting sales in its clothing department. Online sales went up only 20 percent – below its 40 percent expectations for the year – and as a result shares in the company dipped slightly on Wednesday, Reuters reports.
Eyes on Black Friday, Christmas
Now the company is turning its eye to Christmas and has been boosting its presentations in stores to encourage people to buy more, doubling the number of mannequins in its clothing sections over the past year and updating its displays in the home and electronics departments.
It is predicting sales will grow between 1.5 and 2 percent in the fourth Quarter, with its holiday strategy focused on three areas: entertaining, decorating and gifting.
Part of the strategy is a move toward offering more authentic, handmade products, as it attempts to differentiate itself from rivals such as Wal-Mart.
According to Cornell, 20 percent of its "gifting" items will be hand-crafted this year, featuring materials such as real marble, "hand-carved" wood, copper accents and genuine leather.
Elsewhere, Cornell expects Target to be one of the few retailers to sell the Apple Watch in-store – possibly providing a big Holiday win. Cornell also expects an increases in sales of drones and video games, while the hotly-anticipated Adele album – with Target's version featuring three bonus tracks – is expected to drive growth in its entertainment department.
Cornell also referenced Target's exclusive deal with Disney to sell the BB8 "Star Wars" droid ahead of the release of "The Force Awakens" next month, which he expects to be the top-selling toy this Christmas.
Target has already revealed it will offer free delivery on online orders during the Holiday period, and that it will commence 10 days of toy special offers beginning this Sunday.
Target reducing stocking problems
Chief operating officer John Mulligan said in the conference call that Target was making improvements in its supply chain to ensure shelves are properly stocked and online orders fulfilled on time – saying stocking has gotten better particularly in its grocery section.
He highlighted how important it is to right one of the main problems the company has experienced in recent years.
"We strive to be in stock and it's most critical for our need-based commodities, because if guests don’t believe they can rely on Target they will skip some trips," he said, even if they enjoy shopping for non-essential items.
The Wall Street Journal reports Target's Q3 performance proves that the changes the company is making, in the wake of poor performance seen in 2013-14 amid the data breach controversy, are paying off,.
The newspaper says it is helping ease spending concerns ahead of the holiday shopping season, with Cornell confident in spite of the prediction that shoppers will be "cautious" this Christmas.