The closure of 133 stores in Canada has cost Target $5.1 billion, but customer demand for its "cheap chic" over Christmas provided some cheer in its latest trading figures.
The Minneapolis-based company revealed Wednesday that in the three months up to Jan. 31, it made a net loss of $2.64 billion, the fault of which lays with its decision last month to cease operations in Canada, which is costing $5.1 billion.
The company recently announced it will cut 550 jobs in Minnesota as a result of the Canadian withdrawal, and is expected to announce more cost-cutting measures at an investors meeting next week, which Fortune reports could result in more job losses.
However, there was a more positive outlook for Target's U.S. trading, with a sales surge in the clothing, baby, children and wellness departments helping sales to rise 3.8 percent compared to last year, while toy sales over the Christmas period saw a double-digit increase.
The Business Journal notes that this is better than it had predicted, and its total sales of $21.7 billion was 4.1 percent higher than last year.
The growth was aided by the company's free-delivery offer in the run-up to Christmas, which helped boost digital sales, and has led the company this past week to offer free delivery on all online orders over $25.
"We're pleased with our fourth quarter financial results, which were driven by better-than-expected sales and particularly strong performance in our signature categories – style, baby, kids and wellness," Target CEO Brian Cornell said in a press release.
Data breach recovery continues
The company is slowly but surely closing the book on the massive data breach that compromised the personal details of tens of millions of customers, and led to the departure of CEO Gregg Steinhafel last May.
The data breach cost Target $4 million in the 4th quarter, and over the course of the year cost the company $145 million, bringing the total cost of the breach to $165 million.
The breach dealt a huge blow to customer confidence, but this appears to be returning and shoppers are voting with their feet. Cornell said in a conference call that most of the 3.8 percent increase in sales came from its stores, with 0.9 percent coming from an increase in digital sales.
Chief merchandising officer Kathryn Tesija said business was particularly strong around the Black Friday period in November, as well as just before and immediately after Christmas.
She also hailed the success of Target's "Wish List" app, which kids used to highlight their most-wanted Christmas gifts, and led to parents creating thousands of new online accounts.