NEW YORK (AP) - Target's efforts to draw shoppers back into its stores are paying off.
NEW YORK (AP) — Target's efforts to draw shoppers back into its stores are paying off.
Take Annabel Bernardo, who once went to Target for trendy clothes but cut back after she felt it lost its fashion edge.
Now, Bernardo, who lives in Rockville Center, Maryland, is back: "The store is looking much better. It's looking more upscale."
That Target has had five consecutive quarters of increases in a key sales measure suggest there are more shoppers like Bernardo, who are returning to the discounter that pioneered the concept of putting affordable, chic fashions under the same roof as groceries and toiletries.
That's good news for Target, which has been working on a turnaround plan after setbacks that include a major hack that impacted sales for several months and its own misstep of focusing on groceries instead of the cheap chic fashions its customers craved.
The sales improvements come as Target continues a turnaround plan that began with the hiring of CEO Brian Cornell in 2014. As part of the plan, Target got rid of its money-losing Canadian operations and revamped its management team. The company also sprucing up its fashion, baby products and home decor departments, as well as working on better presentation of its merchandise.
Target has overhauled the fit of its jeans, resulting in at least 10 percent sales growth. It's added mannequins to display some clothes instead of folding them on shelves and hangers. And it's recently hired experts for most of its 1,800 stores to make sure they're refreshed with the best merchandise.
As Target works to improve its stores and the quality of its merchandise, though, it says its prices haven't changed. To ensure that, the chain says it's better using its large scale to negotiate prices with suppliers. For instance, for basics like sheets and towels, Target is offering longer-term commitments with manufacturers — ordering for two years, instead of every quarter, a move that cuts down on costs.
Experts say it will be key for Target's turnaround that it balance distinguishing itself from discounters while not being perceived as too out of reach for its mainstay middle-class shoppers. Target's medium household income is $67,500, about $20,000 less than Wal-Mart's customers, according to Kantar Retail, a market research firm.
"It's a tricky balancing act," said Craig Johnson, president of Retail Growth Partners, a retail consultancy.
The changes and sales improvements come after Target wrestled with uneven growth since the Great Recession.
After decades of gaining popularity with shoppers who like the idea of buying trendy clothes and home decor at a discounter that also carries soap and toothpaste, Target faced challenges when the recession made shoppers more frugal.
Target began expanding into groceries, which attracted shoppers. But because its focus wasn't on fashions, the chain was slow to jump on trends. Then, a security breach in 2013 that affected 40 million credit and debit cards hurt its image, sales and profits for months.
Target's annual profit dropped 34 percent to $1.97 billion in its fiscal year that ended in January 2014, but increased 24 percent to $2.45 billion in its fiscal year that ended in January 2015. Total revenue slipped one percent during the year that covered the breach, and was flat at $72.6 billion during fiscal year 2015.
Target gets inspiration from different sources. Its children's dress collection this spring was inspired by tile in Morocco, for example. And 20 percent of its home decor items are either handcrafted or in natural materials like marble or wood. That's up from 5 percent a year ago.
The changes have helped boost sales at stores open at least a year, a key sales measure in the retail industry. In the third quarter, the latest data available, such sales in fashion, home, children and baby items increased more than 2.5 times the average 1.9 percent growth.
The focus on presentation has also paid off. Sales of clothing on mannequins at 1,400 of its stores were up 30 percent, heading into the holidays. Home products with the new displays in 262 stores are selling three or four times faster than the average for the home area.
Target is slated to report its fiscal fourth-quarter results in February.