Business

Tom Hudson: Target needs to get back on track this holiday season

Target has been anything but on target for investors and shoppers. Now it’s up to the retailer to repair its troubled image with a solid holiday season.

Target’s troubles are not limited to its massive customer-security breach last December. It was the worst possible time for a cyber crime — the holiday spending season — when the credit and debit card numbers of 40million of its shoppers were stolen.

The breach saw Target’s fourth quarter profits last year fall 46 percent compared to a year earlier. Certainly, some shoppers were turned off by the problems, but Target also fell victim to steep discounting to bring in buyers.

Since the breach, Target has changed CEOs, quarterly financial performance has been lackluster and its luxury discount strategy has been under attack. The Tar-zhey brand is not as chic as it once was. Other mass retailers have stepped up their fashion sense. In-store browsing and online buying have eroded its electronics business. Stagnant wages and promotional pricing have trained shoppers to be patient buyers.

Target hasn’t been lazy; it just hasn’t connected with shoppers. The grocery stores within a Target might be convenient, but groceries are a low-margin business, and few think of Target as the place to stock their cupboards.

Then there was its disastrous expansion into Canada. It has lost more than $1billion in Canada so far. Its big mistake there last holiday season: wool coats. Cold Canadians didn’t buy them.

Target is scheduled to release its third-quarter results Wednesday. A lot is riding on the next month. Investors are eager to hear whether Target can hit the bull’s-eye this holiday season.

Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.

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