Q1’s poor trading doesn’t dent Target’s CEO’s confidence in turnaround plan

Target’s chief executive officer, Guy Russo, has defended his turnaround strategy even if the struggling retailer saw its revenue fell by 17.1 percent in the first quarter.

Target’s revenue hit 643 million dollars over the first three months of its fiscal year. Meanwhile, comparable store sales plunged nearly 22 per cent as the retailer reduced its promotions and stopped its annual toy sale, reported Bloomberg.

The company’s lead executive explained in a call with analysts on Wednesday that Target's slowing sales momentum from the fourth quarter of the 2016 financial year continued into the first quarter of the 2017 financial year.

Target’s CEO argues its turnaround plan "was the right thing to do for the long term"

"The toy sale was an unprofitable event. It involved six months of holding and managing stock and extensive Christmas lay buys" Russo defended his strategy in an analyst briefing on Wednesday. He added that "It was the right thing to do for the long term," the company’s CEO added, advancing that the benefits may be realised in November and December.

Looking ahead, "Kmart will own lower prices on everyday items and Target will be known for amazing fashion and quality and low prices."

The company will thus continue with plans to shift away from promotions and towards everyday low prices with a focus on establishing Target as a quality and affordable fashion retailer.

Besides, the retailer is planning to reverse the effects of reduced customer traffic and a weaker key revenue measure, acknowledging that it didn’t push the second part of its “Expect More, Pay Less” slogan. It hopes emphasising value and some of the promotions that have worked in the past will win back customers.

Since joining Target’s leadership two years ago, Brian Cornell has been trying to reinvigorate Target’s cheap-chic status and focusing on categories like fashion, home furnishings and wellness items, recalls Associated Press.

“I think there is a very positive mindset as we enter the holiday season,” Cornell said Tuesday. “That being the case, we think we’ve got to win through experience. We’ve got to have great product. We’ve got to make it really simple from a promotional stand point and make it easy to shop at Target.”

Image: Target