TJX Succeeds Where Target Struggles

[InfoSec News <alerts () infosecnews org>]

http://www.fool.com/investing/general/2014/05/13/tjx-succeeds-where-target-struggles.aspx

By Eric Novinson
Fool.com
May 13, 2014

Shares of Target (NYSE: TGT ) fell by about 3% on Monday May 5, 2014 after 
the big-box retailer announced that Greg Steinhafel would no longer head 
up the company as its CEO. This move marked the second high-profile 
departure related to the data breach at the retailer, as CIO Beth Jacob 
left the company back in March. However, the data breach just added to the 
problems that Steinhafel faced at Target. A problematic expansion push 
into Canada and competition from other retailers have also hit Target's 
results. As a result of this, Target posted mixed results for the fourth 
quarter while its competitor TJX (NYSE: TJX ) posted much stronger results 
for the period.



Target's recent results

Target ended 2013 on a weak note, both domestically and in Canada. In its 
last earnings report, Target announced that its fourth-quarter sales fell 
3.8%, although full-year sales still showed a small rise of 0.9%. Target's 
gross margin for the quarter in its domestic operations also narrowed from 
27.8% to 27.6% year-over-year, although the full-year gross margin 
actually showed a minor gain rising from 29.7% to 29.8%. With the heavy 
price promotions going on at many retailers during the 2013 holiday 
season, this actually looks impressive as Target did not take a huge hit 
to its margins for the period.

These figures show that even though the last quarter of 2013 didn't go too 
well for Target, it wasn't a total catastrophe as the retailer still 
managed to show small gains on two important metrics for the year. 
Target's diluted earnings per share fell more sharply for the year from 
$4.52 to $3.07, although most of this stemmed from the $1.13 per share 
impact of Target's Canada push. However, the retailer still retains some 
powerful competitive advantages.


The case for Target

Target sells competitively priced but attractive clothing, appliances, 
household decorations, food, and many other things. While it doesn't 
always have the inventory selection of a category killer, it usually has 
an inexpensive item available to satisfy most needs. The company can use 
price competition to beat higher-end retailers, and its design and fashion 
appeal can help it beat deep discounters. In addition, the company has 
also expanded its food lineup by adding fresh groceries. Wal-Mart and the 
dollar stores also see fresh groceries as a promising growth area. Target 
also has international expansion potential, even if its Canadian launch 
didn't work out as well as it expected. Also, Target isn't the only 
discounter that's lost data to a hack.

[...]



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