Target Corp.’s sagging financial results amid general retail weakness is prompting a change in approach at the discounter and skepticism from Wall Street.
The retailer’s fourth-quarter net earnings dropped 42.7 percent to $817 million, or $1.45 a diluted share, from $1.4 billion, or $2.32, a year earlier. Sales for the three months ended Jan. 28 fell 4.3 percent to $20.69 billion.
That left the company with a earnings drop of 18.6 percent for the full year, to $2.74 billion, on a sales decline of 5.4 percent, to $20.6 billion.
This year, the pain will continue with Target projecting low-single digit declines comparable sales declines.
Shares of Target were down 11.7 percent to $59.09 in midday trading on Wall Street.
“Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores,” said Brian Cornell, chairman and chief executive officer of Target.
The ceo, who will meet with analysts today, said the company would “accelerate our investments in a smart network of physical and digital assets as well as our exclusive and differentiated assortment, including the launch of more than 12 new brands, representing more than $10 billion of our sales, over the next two years. In addition, we will invest in lower gross margins to ensure we are clearly and competitively priced every day. While the transition to this new model will present headwinds to our sales and profit performance in the short term, we are confident that these changes will best-position Target for continued success over the long term.”