Target to expand omnichannel offerings in Q3 as new mobile app sees strong growth

Mass merchandise retailer announces Q2 results

MINNEAPOLIS — Target continued to build its omnichannel business in second quarter 2013 as the company recorded profit and sales growth, partially offset by expenses related to the expansion of its Canadian business.

Speaking to investors in a conference call to announce the Minneapolis-based mass merchandise retailer's second quarter 2013 earnings, EVP merchandising and supply chain Kathryn Tesija highlighted the company's investments in flexible fulfillment, including plans to expand throughout the chain a program allowing customers to buy items online and pick them up at the store the same day, starting in the third quarter.

Mobile offerings have shown some success as well. Tesija said that Cartwheel — an app the company began piloting in May and launched in June, which allows customers to use mobile phones to find and share deals on Facebook and search for deals while shopping in the stores — already had more than 1 million users who had generated more than $2 million in savings. Among active users of the app, more than 50% had used it to complete multiple transactions. President, chairman and CEO Gregg Steinhafel said Facebook had informed the company that engagement statistics for the app were among the best it had ever seen in an app in beta testing. Currently, the app is among the top 20 in the Apple Store.

Other highlights of the quarter included an expansion of the Beauty Concierge program to more than 200 stores in such major cities as Washington, Baltimore and Los Angeles, whereby special staff serve as a "knowledgable source and friendly face" to beauty shoppers. The company has also aggressively targeted college students, including having shopping events on 95 college campuses that include after-hours shopping trips.

Sales for the chain's 1,788 U.S. stores were $16.8 billion, up from $16.5 billion in second quarter 2012. Canadian sales were $275 million, though EBIT was down by $169 million as $207 million in start-up and operating expenses and $49 million of depreciation and amortization offset gross margin of $87 million. Still, the company is operating 68 stores in Canada and said it was on track to reach its goal of having 124 opened by the end of the year. The company recorded a profit of $611 million, compared with $704 million in second quarter 2012.

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