Target's adjusted profit beats forecast
Target's Neiman Marcus collaboration did not turn out to be a holiday gift to the retailer.
The No. 2 discount chain reported fiscal fourth-quarter net income dipped 2 percent as it dealt with intense competition during the crucial holiday season. Still, the company's forecast for 2013 indicated it may beat many analysts' expectations.
"We're pleased with Target's fourth-quarter performance, particularly in the face of a highly promotional retail environment and continued consumer uncertainty," chairman, president and CEO Gregg Steinhafel said in a statement.
But investors were disappointed in the results, sending shares down almost 2 percent in morning trading.
The big-box retailer, known for its cheap but trendy merchandise, had high hopes for the collection of gifts made in partnership with luxury department store Neiman Marcus. The pair of retailers rolled the line of gifts from 24 designers, including Oscar de la Renta and Diane von Furstenberg, on Dec. 1. But just weeks later Target was offering big discounts up to 75 percent off to clear the shelves of unsold merchandise.
Also, during the critical shopping months of November and December Target embraced a number of different strategies, like matching the price of online competitors such as Amazon.com, Walmart.com, Bestbuy.com and Toysrus.com. It was an attempt to combat "showrooming," in which people use smartphones while they're in stores to look for cheaper prices online.
But the initiatives did not spur customers to buy more during the holiday shopping period, which is critical for retailers, as it can make up as much as 40 percent of their annual revenue.
The number of transactions fell 1 percent during the quarter, although the amount spent per transaction rose 1.4 percent.