• by Sarah Mahoney  @mahoney_sarah, March 6, 2018

Target didn’t just announce its latest sales numbers, it crowed about them: Sales jumped 10% to $22.77 billion, up from $20.69 billion in the comparable quarter a year ago. Same-store sales climbed 3.6% for its fourth quarter, including a 4% bump in January. Online sales increased 29%, and store traffic rose 3.2%, which company executives attribute in part to the broad appeal of its new private-label efforts.

But while those results beat expectations, those gains are also costly: Operating income fell 15.8% to $1.02 billion, below predictions.

“I couldn’t be more bullish,” chairman and chief executive officer Brian Cornell told a group of investors, in a meeting that was webcast. “The strategy is working. Our guests are responding.” 

He says the Minneapolis-based retailer “did a better job of advertising Target style, value and ‘priced-right-daily’ to driving traffic … making sure they are shopping us not just for our style brands, but for household essentials as well.” And throughout the call, he reiterated its newest mantra, “to make Target America’s easiest place to shop.”

“Target has finally pulled a rabbit out of the proverbial hat and delivered an excellent set of numbers,” writes Neil Saunders, managing director of GlobalData Retail, in his comments. Calling Wall Street’s reaction to lower profits short-sighted, “we believe that the sales results more than justify the increased costs.” With gains split evenly between instore and online performance, he says it’s an indication “that Target's omnichannel strategy is delivering, but it also shows that the store enhancements are working.”

Cornell, who says the chain saw sales gains in all five of its core merchandise categories, also detailed the ongoing remodeling program. The company says it expects comparable store sales gains in the low single digit in the year ahead.

If 2017 “was a year of significant progress, 2018 is all about acceleration,” Cornell says, “ensuring that Target is one of the long-term winners in retail.”