Target CFO: Stores Did A Phenomenal Job Of Bouncing Back From A Busy Holiday Season

Target Corporation (NYSE: TGT) posted better-than-expected fourth-quarter earnings on Wednesday.

John Mulligan, Target CFO, was on CNBC to discuss the company’s results.

What Drove The Strong Results

“In the middle of January we said that we thought a 3 percent comp for the fourth-quarter, ended up today reporting a 3.8 percent comp which was a pleasant surprise for us,” Mulligan said. “I think, what really drove that was several things.

"First, we had a very, a great discount on gift cards that we did over the Black Friday holiday and all of those gift cards came back into the store in January. So, really bringing all that sales back in January.

"We think the stores did a phenomenal job bouncing back from a very, very busy fourth quarter or holiday season and bouncing back, getting the store ready with new product, having all that ready when people came back to the store.

“And then third, we have talked about wellness, well-being one of being our key categories is going forward and of course that becomes very important in January as people look to start the New Year in a healthy way."

Lowering Shipping Threshold

When asked about how reducing the free shipping threshold is impacting Target, Mulligan replied, “We make investments in our business all the time and to me as we think about this, we thought about the free shipping in fourth quarter, really one of the best investments we can make. As we look at guests behavior when we look at our guests who shop at our stores routinely, if we can convert them and get them to shop online automatically we get more sales because they are shopping online, but [that] actually increases their engagement with us in the store as well.

"So we have seen a significant in both sales and gross margin dollars of profitability from that guest.”