Target needed a win, and it got one.
The retailer’s first-quarter results on Wednesday show that the turnaround strategy it unveiled earlier this year is off to a running start.
Target significantly exceeded analyst expectations, with a 6.7% year-over-year lift in net sales to $25.4 billion and comparable sales growth of 5.6% for the quarter, compared with the Bloomberg consensus of $24.5 billion and 1.85%.
“Even with this early progress, we know our work is just beginning,” CEO Michael Fiddelke said during a media call on Tuesday. “We have confidence we’re on the right path, because guests are responding in areas where we are leaning in and driving change.”
Some of Fiddelke’s key priorities that drove the quarter’s results included improvements in merchandising and the shopping experience, he said. In particular, broadening the assortment to include a wider range of price options in categories like wellness and toys helped Target attract shoppers across income cohorts.
“We added in clear price points at $3, $5, $10, but we also added experiences in our stores, so when you actually shop the toy aisle, now you’re discovering something new,” chief merchandising officer Cara Sylvester said on the call. Last month, for example, the company rolled out a brand collaboration with Hot Wheels that included kids’ racetrack-themed bedding and decor.
The retailer also invested in customer experience training for 300,000 store workers to “drive consistency and accountability,” Fiddelke said. Some of the changes have included a revised dress code and new guidance for engaging with shoppers.
Target has struggled over the past year to keep shoppers who have opted instead for everyday-value-focused chains like Walmart and Costco.
But the enthusiastic customer response to recent collaborations, including Pokémon and Roller Rabbit, as well as a refresh of the baby section, appears to be helping the company regain some of that share.
At a time when household budgets are stretched by rising gas prices, Fiddelke said Target is focused on balancing exciting products with a compelling price.
“Our consumers are a microcosm of the American consumer,” he said. “More guests were picking Target more often in the first quarter because we’ve gotten that combination of style, design, and value right.”
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