MINNEAPOLIS–Target’s home business declined in the mid-double digits in the fourth quarter as the retailer “experiences challenges we have not seen before in our business,” and works to overcome perceptions that it’s not price competitive with Walmart, Gregg Steinhafel, chairman and chief executive officer, said during a conference call.
Still, Target will launch more exclusive designer collections than it did last year, including home programs.
For the fourth quarter ended Jan. 31, Target’s net earnings fell nearly 41 percent to $609 million.
Sales declined 1.6 percent to $19.0 billion and comparable-store sales fell 5.9 percent. Retail segment earnings before interest expense and income taxes dropped 22.9 percent to $1.25 billion from the year-ago quarter.
Come spring, Target will launch a home collection with bold color, texture and patterns, as well as Mio, an outdoor-living program.
The retailer said it has tweaked its home department by consolidating multiple subbrands into a single brand, enhanced the product quality of the brand, and is better highlighting product features and benefits, said Kathy Tesija, executive vice president of merchandising, during a conference call.
The home business is being planned conservatively for the spring as the discretionary category is more prone to markdown exposure, Steinhafel said.
But the big push now is amplifying the “pay less” part of its “expect more, pay less” brand proposition in its stores, circulars and advertising messages “with a savvy, smart approach,” Steinhafel said.
While Target comes between one and two percentage points of Walmart price-wise, “The guests’ perception does not reflect this reality,” Tesija said.