The Target turnaround has been short-lived. On Tuesday the U.S. based discount retailer posted a third consecutive quarter of declines in comparable sales, as a surge of 34% in its online business could not compensate for the exodus of shoppers from its brick and mortar locations during the all-important holiday shopping season.
Target is expecting the struggles to continue in 2017 while it tries to determine the best way to revive its business. For its complete fiscal year that begin February 1, Target is expecting a decline in the low single digits in its comparable sales, following a worse than what was expected drop of 1.5% during its fourth quarter.
Some of the initiatives Target will be disclosing during its annual meeting late Tuesday with analysts includes the launch of 12 new house brands over the upcoming two years that it thinks will eventually reach annual sales of $10 billion and perhaps even more important, lowering prices on a number of its goods so it can become competitive in its price war with the likes of Amazon.com and Walmart.
CEO at Target Brian Cornell in 2016 conceded that the company let itself be outdone on its prices by rivals through over focusing on its “export more” line and not having enough products on the less expensive side, which can be a dangerous miscalculation for today’s discount retailers.
However, those days might be over, he said in a prepared statement the company released.
He added the company would invest in gross margins that were lower to ensure it is clearly as well as competitively priced each day.
He added that the company was confident that the changes will best position it for continued success during the long-term.
Cornell has been the CEO at Target since August of 2014 and under his rein, Target has looked to return to form through focusing on expanding its smaller urban stores, closing underperforming companies such as its venture into Canada as well as its pharmacies, and reviving its private label products, all while at the same time cutting costs improving things such as in-stock levels at its stores.
That worked well for a while, but along with the problems that have hit retailers such as Macy’s, as many did not give their shoppers a big enough reason to visit their stores, Target stumbled on many key issues.
It did not reinvent its grocery to help fight off Walmart’s resurgence in the industry. The handover of the pharmacies to CVS did not go smoothly and many executives have abandoned ship.