Target 2Q17 Earnings Call Notes

Brian Cornell – Chairman and Chief Executive Officer

Pace of change doesn’t appear to be slowing

“During this period of rapid transformation in retail in which many others are shrinking, we will continue to look for ways to partner and deliver incremental growth for high quality brands while delivering differentiation and value for our guests. As we look ahead, we are committed to continued progress against our long-term goals. And we expect the environment will continue to be challenging. The pace of change in the consumer and competitive environment doesn’t show any signs of slowing down. And we are well positioned to emerge as one of the winners in retail”

Mark Tritton

Strong growth in hardlines

“In hardlines, comparable sales grew between 3% and 4% in the second quarter, the strongest performance we have seen in 10 years. Growth in this area was broad-based including double-digit growth in both videogames driven by Nintendo switch and Apple within electronics. Toys grew more than 3% with board games continuing to be a strong highlight. ”

Apple strength across the board

“I think firstly just on the Apple comments, they weren’t just driven by tablet, they are driven across the board in categories. And we had really strong showing in Q2 on the iWatch which we worked with Apple on clearly. And we have a lot in our plans for Q3 and Q4 with potential new launches as I have outlined. So we think there is still room for growth and continuing the trend. In terms of Nintendo Switch, we worked really closely with those guys as well to develop not only a product but a marketing campaign that the guests really responded to. ”

Cathy Smith

Better than expected performance

“In the second quarter our traffic sales and financial performance were all better than expected. Notably, the upside to our expectations was broad based across the country, across channels and in all three months of the quarter. Second quarter comparable sales increased 1.3% driven by a traffic increase of 2.1%. “

Target 4Q16 Earnings Call Notes

Brian Cornell

A seismic shift for our industry

“For the past several years, we’ve been watching several key consumer trends emerge. People are placing greater value on experiences. Often they would rather live it than own it, especially young people. When they buy, they want to buy into a greater purpose, not just a product. Taken together, these changes can only be described as a profound shift in the consumer mindset. Then combine that with the different behaviors around how and where consumers are choosing to shop. Today, there is total transparency. Ease and speed are paramount. The shift in channel preference is real and only gaining momentum. Our industry is the midst of a seismic shift, and, of course, you read the headlines.”

Not seen this number of distressed retailers since 2009

“In fact, many of you write the reports, we’re operating in an incredibly challenging environment. All across the retail industry, many of our competitors are aggressively rationalizing their assets. They are closing stores, exiting markets. They’re cutting costs just to keep their heads above water. We’ve not seen this number of distressed retailers since 2009 in the Great Recession. This contraction will create opportunities for Target to pick up market share over the long-term, but aggressive promotional activity will create pressure on our business in the near-term. At the same time, there are others who are thriving in this new environment. So the changes we’re making aims squarely at moving Target into the retail winner circle.”

The essential Target doesn’t translate to the digital world

“that essential base Target run doesn’t completely translate to the new digital world. Traffic drivers are fundamentally different and guests behave differently too. Put a guest in the store, they are looking for inspiration, they enjoy discovery, they enjoy shopping. But very often a visit to, it’s far more transactional. One item at a time, logon, check out, as fast as possible friction free.”

Challenge is to continue to understand consumer evolution

“So the challenge ahead is really about continuing to understand how consumer preference and expectations are evolving. Anticipating where they are going, what they’ll want before they have to tell us. Finding new ways to engage at every stage in every occasion. Offering and clearly communicating compelling value in every interaction at every touch points and building a new Target that’s uniquely positioned to compete and win, delivering on two pillars of market share growth, one digital, and one physical.”

Need to be proud of who we are. This isn’t the first shift in retail

“The third and final piece of our strategy is about standing proud and being confident about who we are, holding up the power and the potential of our brand as a beacon, and leaning into all the reasons guests fell for Target in the first place. So at the start this morning, I talked about how we’re looking at this seismic and accelerating shift in our industry and that’s true. But you know better than anyone that these inflection points come around every generation or so. And strong retailers endure, while others, well, they don’t. Pick your era defining change throughout history from downtown department stores to suburban malls, catalogs, e-commerce. Target not only weathered the storm, we emerged better positioned as a result, and that’s for many reasons.”

2017 is a year of investment

“I’ll go back to my what Cathy talked about a few minutes ago. We certainly view 2017 as a year of investment. In 2018, we’ll continue to transition as these different initiatives begin to mature. As we get into 2019 and beyond, we certainly expect stability and a return to growth. So that’s the model we’re looking at. We can’t laid out for you quarter-by-quarter. We want to make sure, we’re properly investing and accelerating these initiatives. And if there’s a message I want everyone to walk away with today, these aren’t new initiatives. We’ve been working on these for several years.”

We’ve got to invest to grow

” We’ve got to invest to grow. We’ve got to reimagine our stores. We’ve got to enter new neighborhoods as we’re doing with these small formats. We’ve got to transform our supply chain. We have to build out the digital capabilities required in this environment. We have to continue to elevate our proprietary brands. And I think most importantly, we just have to embrace the realities of this new era of retailing and make sure that we also embrace the way consumers are shopping today.”

Data science has become a strength

“Oliver, let’s try to unpack those questions. Let me start with the last one, as we think about the role of data science and analytics. And I made the comment that three years ago this was a nascent capability for us. It’s now quickly become one of the strength of the company. And we’re applying that across all of our various functions. It’s helping Mark and his merchant team make better choices. It’s certainly enabling some of the work that John is leading from a supply chain standpoint. It’s influencing how we lead and manage our stores. And Mike can talk about the important role it plays as we think about digital and the personalization of our communication. So data science is going to play an important role across all of our functions going forward to make the company focused on the right decisions, smarter decisions, more personalized decisions.”

John Mulligan

Stores are our key competitive advantage

“First, let’s talk stores, our key competitive advantage. They are at the center of everything we do for our guests regardless of how we deliver. The 40% digital growth we saw in December, they enabled it. In the two days that followed our record-setting cyber Monday, our stores shipped more than 1 million orders to fulfill that demand. The week before Christmas, our stores fulfilled nearly 70% of our orders. And on Christmas Eve, they fulfilled more than 80%, shipping about half of those to our guests and packing the other half for in-store pickup.”

We’re slow and have too much inventory

“This past year, we hired a lot of talent with deep expertise and set wheels in motion for a major revolution of how we operate. We’ve honed in on two points we have to fix. To put it bluntly, we are slow and we have too much inventory. And I can’t tell you how painful it used to be to say that out loud. But now I’m actually eager to share it, because I’m so confident the work we’re doing will position us to compete on a whole new level. Fundamentally, we’re changing how we move product.”

Target 3Q16 Earnings Call Notes

Target’s (TGT) CEO Brian Cornell on Q3 2016 Results

Encouraged to see a meaningful improvement in sales of Apple products

” in the third quarter, we were encouraged to see a meaningful improvement in sales of Apple products driven by their introduction of several new product innovations.”

Expecting it to be promotional and competitive holiday season

As we think about the holiday season, we expect it to be a very competitive, promotional environment like we’ve seen over the last couple of years. So, we think we’ve got great plans in place and we’re very excited about the merchandising, the marketing and promotional plans, and we think we’re going to be very competitive throughout the season.”

Mark Tritton

Weak trends in mobile phones overall as upgrade cycles lengthening

“As Brian mentioned, the electronics recent product launches helped improve trends in Apple this quarter, however, we continue to see soft trends in mobile phones overall, which is what we’ve seen in the industry as upgrade cycles are lengthening.”

Planning for strong demand for Apple, VR and connected home devices

“In electronics this quarter, we’re planning for strong demand for Apple new products, given that pre-order volume was three times higher than last year. We’re also expecting a lot of guest’s interest in Virtual Reality along with connected home devices like Google home.”

Products will be in stock. Invested in supply chain.

“When guests shop at our stores this holiday season, in addition to great products displays and services, you’ll find our in stock position is better than we’ve ever measured, reflecting improvement across every category we sell, and importantly, we are attaining those in stock levels with lower inventory than a year ago. Over the last 18 months, we’ve deliberately invested in our inventory position and key commodity categories. To ensure we remain in stock, and categories where reliability is most important to our guests However, now that we’ve annualized these investments, and we’re beginning to see the benefit of our work to make our supply chain faster, and more reliable, we’ll be able to deliver outstanding in stocks on a smaller base of inventory over time.

The accuracy of our inventory data is key to our speed and reliability, and we’ve been investing in our systems and processes to achieve greater accuracy. One example is our implementation of our RFID Technology and a portion of our apparel assortment, which is currently in more than 1,600 of our stores.

In affected categories, overall inventory accuracy has increased dramatically, meaningfully reducing the number of occasions in which we can’t physically locate an item. In addition, we’ve made system changes to optimize replenishment of products that our guests purchase in multiples and made changes to minimum on hand standards and higher volume locations, both of which have dramatically reduced our stocks on effective items. We will continue to test and roll out these enhancements throughout next year

Because of our efforts to eliminate non-guests facing work in our stores, the team is delivering outstanding service to our guests, while delivering efficiency and support of our cost control efforts.”

Target (TGT) 2Q16 Earnings Call Notes

Shift to digital remains a retail trend to which Target continues to adapt

“Digital sales grew more than 60% in the second quarter on top of 30% growth last year… In the second quarter, we launched a brand new fully adapted site, which means we now provide a seamless experience across all platforms from desktop to tablets to smartphones. This is increasingly important because for many guests, a single purchase journey crosses over two or more of these digital devices.” Brian Cornell – Chairman and Chief Executive Officer


Target is making strides in use of distribution centers (DCs) and relations with vendors

“In the past, an unacceptable number of vendor shipments were received by our DCs either too early or too late. This variability drove a lot of extra workload in the DCs while reducing our reliability downstream. As a result this year, we have been collaborating with our vendors to increase the percent of shipments that arrive on the correct date and we have already seen meaningful progress. The percent of shipments that arrive on time has more than doubled and we expect to see additional improvement as we roll out new processes to additional vendors over time.” John Mulligan – Chief Operating Officer


And is utilizing existing store locations to improve supply chain

“Our flexible fulfillment initiatives, including store pickup and ship-from-store are one way we are reinvesting store labor savings to serve guests in new ways. At the end of 2015, more than 460 stores were shipping items directly to guest homes and we are planning to double our capacity this year by expanding this capability to more than 500 additional stores.” John Mulligan – Chief Operating Officer


Consumer caution has led to challenging environment for retail over the last year

“I think we have seen this environment persist now for well over a year. It’s a very cautious consumer. And if we look at the overall trends within retail, we have certainly seen on a rolling 12-month basis a slowdown in retail sales growth, but that’s not an excuse for us. We are going to make sure we are leveraging our strategic levers…So it’s competitive, but it’s always competitive and we got make sure that we are leveraging our assets and our strategy to continue to drive performance in the back half of the year.” Brian Cornell – Chairman and Chief Executive Officer


CEO vigorously rebuffs claims of stinginess regarding CAPEX

“food and perishable and consumable categories will play a very important role in driving traffic to our stores…John is doing to make sure and we are investing and improving our in-store pickup processes and experience. That’s an investment we are making, an investment we are making for the holiday season. We are continuing to invest in our digital assets. So there is no hesitancy at all from this management team nor the Board in making the right investments in our long-term success.” Brian Cornell – Chairman and Chief Executive Officer

SK Additions:

Brian Cornell

Negative trends in electronics and grocery

“As we analyze the drivers to our second quarter performance, we have identified some company-specific challenges we are actively addressing. This includes meaningful pressure on electronics, where we saw a double-digit decline in comp sales this quarter, accounting for approximately 70 basis points of overall comp decline. Notably, about a third of this pressure was driven by Apple products, which are down more than 20% in the quarter. We are focused on reversing these trends and we are collaborating with Apple and other vendor partners to evolve our assortment and accelerate innovation to deliver stronger sales. In grocery, despite improvements in assortments, quality, freshness, presentation and in-stocks, we were disappointed with our sales performance as we saw a small comp sales decline in the second quarter.

We over-indexed Apple products

” as we think about factors that we have to address to improve our traffic and overall sales performance to the back half of the year, we have to improve electronic performance. It was a significant drag, 70 basis points on our overall comp declines in the quarter. And Apple played a significant role there. So we over indexed with Apple products. Our guests come to us looking for those products. They are looking for the newness and the innovation and we are putting together plans with Apple and our merchandising teams to make sure we are ready to take advantage of that in the back half of the year.”

West coast markets doing better than east coast

” We have seen particular strength in many of our West Coast markets, very strong performance in California, driven by great performance in LA and San Francisco, but other parts of the West Coast. We have seen pockets of softness on the East Coast.”

There are winners and losers in tech

“So we have certainly seen pockets of strength, I mean there is certainly winners and losers within that space. We have seen continued performance with wearable technology, but it’s not overcoming the softness we have seen in mobile, in tablets and in some of the core items.”

Target 1Q16 Earnings Call Notes

Brian Cornell

Saw a decline in smaller convenience trips

“Sales in the quarter came in lighter than expected and daily and regional shopping patterns were more volatile than the entire periods. While guests generally maintain their pattern of larger, pantry stocking visits, we thought slowdown in growth of smaller convenient strips.”

Seen a significant geographic variance

” as we looked at business in April, and again in the start of May, we’ve seen a significant performance difference between our West Coast markets and particularly our Northeast markets, and significant variability, where we’ve seen some very positive growth performance across our entire portfolio, in Los Angeles, in San Francisco and many of our core West Coast markets, offset by significant slowness in the Northeast, in Boston, in New York, in Philadelphia, in D.C.”

Consumers are spending on home improvement

“We recognized the year-on-year fuel prices have increase and our guest and the consumer spending than they did a year ago at the pump. And we’re certainly recognized that within overall categories today’s consumer, our guest is reinvesting in their homes. They’re spending money on home improvement.”

Majority of retail still done in stores but starts online

” we recognize that even as we look at the start of 2016, the majority of the retail business in United States continues to be done in stores, but it starts online, so we better have great digital capabilities to make sure when our guest is shopping target, no matter how they shop, we make it a convenient, easy experience.”

Consumers are paying more at the pump again, that’s having an impact

“certainly it was earlier Easter. We recognize the impact of that. Certainly weather in many major markets has been a factor. It’s not an excuse. We’ve got to figure out how we perform under any circumstances. We know as the guest and our consumer has moved through the course of 2016, prices of the pump, fuel prices have resin and that certainly an impact. And then when we look at macro basis on overall spending, we certainly recognize that consumers are spending more on travel, on leisure activities, they been investing in their homes as I mentioned before. ”

Catherine Smith

Post Easter sales softened noticeably

” Within the quarter, we experienced solid results through the Easter holiday; post Easter sales and traffic trends softened noticeably consistent with what you’ve heard from many of our competitors. Also notable in the first quarter we saw a meaningful increase in the volatility of our weekly sales performance compared with last year.”

Planning to manage inventory more carefully given slowdown in sales

“Quarter end inventory was up a little bit more than 4% rising faster than sales [ph]. As John mentioned, some of this growth reflected intentional inventory investment in to support in-stock in essential categories. However, given the recent slowdown in our sales and our caution regarding the second quarter, we are planning to manage inventory carefully throughout this quarter and beyond.”

Miscellaneous Earnings Call Notes 2.26.16

Dean Foods FY 1Q16 Earnings Call

Gregg Tanner

Global milk production continues to increase

“We expect global dairy fundamentals to continue to be overall supportive to our business as production growth continues to outpace demand. Year-over-year, total milk production from the top seven exporters continues to increase, albeit at a much slower pace compared to the initial robust expansion experienced in 2014.”

Export volumes continue to decline

“I think the other thing that wasn’t in our prepared remarks is that we’re seeing export volumes continue to decline, so it’s leaving more milk in the U.S., which I think will help us longer term to kind of keep the prices more manageable as well.”

Greenlight Capital Re’s (GLRE) David Einhorn on Q4 2015

Entered 2016 with lowest short exposure ever

We entered 2016 with 16% net exposure, the lowest we’ve entered any year. The Greenlight Re investment portfolio returned 1.2% in January while the S&P 500 fell about 5%. Our shorts have been helpful and returned 7% in January. We started to see some reversion in the market in January and February as the markets have sold off we become a little more net long as our shorts have fallen in value and we found a few things to buy.”

Consumer could come to the rescue

“On the bright side, the U.S. consumer may come to the rescue as we are nearing full employment, wages are slowly rising and there is an effective tax cut in the form of low energy prices. It remains to be seen whether the U.S. consumer will provide support for corporate earnings and if not at least we hope they buy iPhones, GM cars, and Michael Kors bags particularly at Macy’s.”

Heidrick & Struggles International’s (HSII) CEO Tracy Wolstencroft on Q4 2015 Results

Everyone is focused on the volatility but no one is frozen by it

“We are all like you looking at the opening of 2016 and seeing the volatility, whether it would be how it emanates from Asia, from the energy markets, consequent knock-down effects in financial services, etcetera. We find in our client dialogue that while everyone is focused on it, no one is frozen by it. That may – does that that evolve? We will see. But I would say that every – certainly myself in meetings with clients as well as in meetings with our consultants, we are trying to get a barometer on what you are asking every single day. And it would be very difficult for us to give a broader trend line to what I just described.”

Rich Pehlke

Certainly seeing volatility in economic conditions affect client decisions

“We certainly are seeing the current volatility in the economic conditions factoring the client decisions about what they are doing and what they are thinking about the growth of their business and how they are going to deploy capital. The good news is as we have said many times is that talent is the hot agenda item for most leaderships and boards today. But at the same time, capital deployment certainly has an impact on driving our business. Where we have probably seen the most is as is consistent with what you have read in the news, where we probably see the biggest volatility right now is in the APAC region, simply because of the impact of China and what you see going on there in terms of people thinking about the region itself. And then certainly from a sector standpoint, we have seen more discussions and commentary in areas like financial services, which really are driven by large financial institutions from larger banks and obviously they moved and certainly have an influence on some of that. ”

Edison International (EIX) Theodore F. Craver, Jr. on Q4 2015 Results

SCE is a “wires focused business”

“We have positioned SCE as a wires-focused business, consistent with our views on industry transformation and in alignment with California’s public policy objectives to move the state to a low carbon economy.’

Bank of Montreal (BMO) William A. Downe on Q1 2016 Results

Surjit Rajpal – Chief Risk Officer, BMO Financial Group

Delinquency tick ups because the quarter ended on a Sunday?

“The question that you asked relates to the fact that this quarter again was on a weekend. And the difference between this quarter and the last quarter was that this quarter was on a Sunday, as opposed to ending on a Saturday, which really means that two days of payments that you would normally receive had to be deferred to the Monday following. And that explains the difference, because right after the weekend, the delinquency rate did go back to normal levels. So, I wouldn’t read too much into the early-stage delinquencies that you see in the chart there.”

90 day delinquencies have increased in Alberta

“So, when I look at the 90 days, you did notice that there was a quarterly increase of 14 basis points year-over-year, and that is telling in some ways. And we looked at Alberta in that respect as well, because your question if it’s more related to what’s going on in Alberta. In Alberta, year-over-year, there has been an increase of 34 basis points, which is actually much more telling. ”

Stifel Financial (SF) Ronald J. Kruszewski on Q4 2015 Results

IPOs were down 65% in 2015

“The number of priced U.S. IPOs in the fourth quarter of 2015 decreased to 32 from 68 during the same time period. That’s really down 53%. For the full year of 2015, the overall U.S. IPO market was down in terms of both number of transactions, which were down 41%, and dollars raised, down 65%. Certainly a difficult year in the IPO market and not starting off particularly strong this year.”

The reality versus the market’s perception are completely different

“The reality sometimes of what’s going on versus the market’s perception are completely different. This is one of those times.”

Target (TGT) Q4 2015 Results John J. Mulligan – Chief Operating Officer

Customers trust that you’re in stock

“What I think is much more important, when you talk about essential categories, ultimately this is about the guests trusting that you will have the merchandise they want when they come in our stores. If a new mom takes her baby out in 10-degree weather for diapers and formula, you better have diapers and formula in your store.”

HP (HPQ) Dion J. Weisler on Q1 2016 Results

Haven’t seen stimulation of demand from Windows 10

“I would say that Windows 10, whilst I still believe it’s a tremendous operating system platform and universal apps and continuing computing make devices like the Elite x3 a reality, we have not yet seen the anticipated Windows 10 stimulation of demand that we would have hoped for, and we’re carefully monitoring any sort of price developments that could further weaken demand. ”

Campbell Soup (CPB) Denise M. Morrison on Q2 2016 Results

Weather had some impact

“Finally, weather is not something we control and it’s certainly not the main reason for the decline in our soup business, but we believe the unusually warm winter had a negative impact on the entire category in the first half. ”

Target 3Q15 Earnings Call Notes

Target’s (TGT) CEO Brian Cornell on Q3 2015 Results

Brian Cornell – Chairman and Chief Executive Officer

While consumers cautious we feel confident

“Sales in signature categories have been growing much faster than our overall sales, and they’re clearly exceeding industry benchmarks. So, while consumers continue to spend cautiously, we feel confident as we enter the holiday season. And we’re focused on continuing to deliver on both our strategic priorities and our financial goals.”

Wearables were standout in electronics

“One standout in electronics was wearable devices, part of the signature Wellness category, where we saw nearly 100% growth in comparable sales.”

We’re feeling good about the consumer sitting here in November

“we’re feeling really good about the trends we’re seeing, the reaction we’re getting from the guests. Certainly the growth in traffic for us is really encouraging. So, we’re seeing more Target guests come back to our stores and visit our sites. And they are continuing to respond very positively to the work we’ve done in signature categories. So, sitting here today, we are very confident about our position. We think we are connecting with the consumer and our guest. And I feel fantastic about the plans we have in place for the fourth quarter. So, while obviously still cautious, as we sit here early in November, we feel very good about the way the consumer and the guest is responding to our brand. And I feel as if we are really well-positioned for the fourth quarter.”

20% growth rate online below our expectations but outperforming the industry

“while our 20% growth rate is not in line with our expectations, it’s still dramatically outperforming the industry. And I think the most important measure we are looking at is the fact that over 80% of our guests start their shopping journey online, either at home on their desktop or via the mobile device. And that digitally influenced guest is coming into our stores more often.”

We have expanded our ship from store base

“Last year at this time, we had just over about 120 stores where we were shipping from store. As we sit here today, we are up to 462. So, we have expanded the base. We are going to leverage and swept the assets I think much more effectively. But importantly that enhanced base allows us to deliver to our guests in a much shorter timeframe. So, we would expect that to grow during the holidays. We have certainly ramped up for it.”

John Mulligan – Chief Operating Officer

The economics of ship from store work out well for us

“The labor model, what happens here is, actually it’s quite efficient because we have dedicated teams in those stores who do the picking, do the packing, and we are just able to use them, utilize them more efficiently. So, while there is more store labor that we are using, the offset clearly comes in our shipping expense because we are much closer to the guest we are shipping to, and then on the same P&L line but it’s an outstanding trade for us.”

Cathy Smith – Chief Financial Officer

Digital traffic growth hasn’t been as high as we expected this year

“although we have seen an acceleration in the last two months, we haven’t seen a growth in digital traffic we expected to see this year. We believe our biggest opportunity to drive traffic continues to be our work to streamline and enhance the digital experience.

Target 2Q15 Earnings Call Notes

Digital sales grew 30%, which was slightly below our expectations

“Second quarter digital sales grew 30% from a year ago slightly below our expectations as we compared against very intense digital channel promotions last year. Digital growth contributed about 60 basis points to our comp sales growth this quarter. ”

Priority is to become a digital leader

“Looking ahead we’ll continue to work to advance the key strategic priorities we laid out last fall. First on our list is to become a leader in digital, this is critically important because guest research shows that digital relevance drives traffic and engagement across all selling channels. While we’re pleased with the industry leading growth we’ve seen so far this year we have much more work to do and a key asset will deploy is our source. We’re already shipping digital orders from approximately 140 stores and by the end of this year we’ll be shipping for more than 450 locations.”

Ship from store capabilities allow more inventory balance

“Ship-from-store capabilities allows us to balance inventory across the network, leverage the capital and labor already in our stores and reach guest more quickly.”

Supply chain needs to be fundamentally reworked

“Retail is changing rapidly today than any time in my career and we need to ensure that core operations keep pace with the new ways we’re serving the guests. Overtime Target has developed an incredibly complex supply chain, built to serve an outdated linear model in which product flows from vendors through distribution centers to stores. To serve guests today we are becoming much more flexible in a way we fulfill demand for products and services. And this is stretching our supply chain well beyond its core capabilities.”

As we’ve had to change some fundamentals have suffered

“And frankly, as a result some retail fundamentals have started to suffer. Specifically in stocks in our stores have been unacceptable so far this year. And our guests deserve better. In this new role I’ve asked John to focus first and foremost on improving the capabilities of our supply chain, working across organizational boundaries to understand and address root causes that are hampering day to day execution.”

Pleased with comp performance so far this month

“As we look ahead to the full year we are certainly pleased with our results so far which have been notable stronger than expected and we have been pleased with comp performance so far this month, including back to school sales which reflected retiming of some tax free holidays into early August’

“we’re seeing a very positive start to back-to-school and back-to-college.”

Pushing for more localization

“let me start with localization and as I said during the couple of calls, this is still a very nascent effort for us. We’re in one market a handful of stores in Chicago, but we’d really been focusing on a handful of areas where we recognize we need to change our assortment, change our presentation, be more relevant and really recognize the needs and the demographics of these local markets. So, there is a handful of categories I might list up one craft beer and really making sure that in a category like craft beer we have locally relevant items and we recognized that even in a market like Chicago those need to be tailored neighborhood by neighborhood.”

Have to build a good digital experience

“We got to continue to make sure that we build awareness. We got to make sure that as our guest engages with us digitally we make it really easy, and we make it easy to find product and easy checkout experience. We believe that available to promise which will roll-out this fall will give our guest the confidence that they know where the product is and when it will arrive for them either in a store for them to pick up or being available directly to their home. So we’re focused on making sure that we provide not only a great in-store but a great digital experience and we’re going to make sure that we continue to make our site easy to work with and more and more that’s the mobile interchange that we’ve got to make sure is easy for our guest to find product and checkout. ”

Turn our stores into flexible fulfillment centers

“And to the point John made, we don’t need to be building upstream DCs we’re going to continue to convert more of our stores and as we go in the fourth quarter close to 450 that will act as flexible fulfillment centers to make sure that we can quickly and efficiently get product to the guest.”

Target 1Q15 Earnings Call notes

particularly strong results in March

“While we enjoyed a healthy pace of sales throughout the first quarter, we saw particularly strong results in March, as weather warmed across many parts of the country and Easter timing moved seasonal sales into the month.”

Lilly Pulitzer collection was so great our digital channels couldn’t handle it

“In April, we were thrilled with the overwhelming demand for items from our collaboration with Lilly Pulitzer, with most of the collection selling out in the first few days. We were disappointed, however, that our digital channels were not able to properly accommodate the surge in traffic at the time of the launch’

Disney’s PR machine is unstoppable

“like moviegoers, we’re already excited about the December movie release from the most famous license of them all, Star Wars. Earlier this month, as part of the worldwide ‘May the 4th Be With You’ event, we allowed Darth Vader and Yoda to take over the homepage, offering special online-only deals on Star Wars licensed product. We’ll provide more details on our next earnings call but for now I can assure you that Star Wars fans will find plenty of reasons to visit our stores and this year.”

Digital sales grew 38%

“Digital channel sales increased 38% in the first quarter on top of more than 30% growth in the first quarter last year. Digital channels drove about 80 basis points of our first quarter comparable sales increase in line with our fourth quarter experience.’

Inventory increase is intentional

” I want to comment on our inventory position at the end of the quarter which was about 9% higher than a year ago. This increase was intentional and reflects some decisions we’ve discussed in the past calls.”

No impact in oil industry heavy states

“we didn’t see any correlation between what you just referred to, changes in the oil and gas industry, and an influence on our comps. Obviously, like everyone else, and this happens every single year, weather did impact regional performance.’

Target 4Q14 Earnings Call Notes

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Comps were double our expectations

“we look back at our point of view going into the fourth quarter, comparable sales growth turned out to be nearly double our original expectation. As our combination of products, promotions, holiday marketing, fulfillment capabilities and in-store execution drove profitable growth in an intensely promotional environment.”

Traffic was the primary driver

“We are also pleased that traffic was the primary driver of our fourth quarter growth as well as the fact that the digital channel growth contributed nearly a full percentage point to our fourth quarter comparable sales increase.”

Come a long way from last year

“we’ve ended the year with the data breached fully behind us and that we’ve made tough decision to execute the Canadian business. Our team is focused and aligned on five priorities, I outlined in our third quarter call.”

Holiday season is starting earlier and ending later

“Across the U.S. retail landscape, this year’s holiday shopping season began earlier and ended later than ever before. This lengthening of the season reinforced a pattern we’ve seen for well over a decade, where we saw the strongest sales in the early and late portions of the season and experienced a period of softness in the middle.”

Lull in December for a decade

“In December, following the characteristic lull that we have seen for more than a decade we saw a very strong surge in traffic and sales in the days leading up to and after Christmas.”

Free shipping at $25

“Because our guest responded so well to this holiday promotion. We were excited earlier this week to announce that going forward we are reducing the order threshold for free shipping from $50 to $25 with virtually no exclusions.”

Will take a while to sort out the ports

“We were very pleased with last weekend’s news that a tentative agreement had been reached, but what we know it will be sometime before the backlog at these ports will be fully eliminated. In the mean time, we have contingency plans to continue to work around potential issues. But at times, we may encounter periods of light inventory in some assortments.”

Growing wellness

‘wellness is one of the signature categories in which we’re investing to differentiate our brand and our assortment from competition. We have a huge opportunity in this space, because our guests have told us it’s particularly important to them.”

Modeling 30% e-commerce sales growth

“We expect our comparable sales to increase about 2%, driven by an increase in digital channel sales of 30% or more, combined with the modest growth in store channel sales. ”

We feel pretty comfortable with what we’re paying people

“You know, we don’t disclose the average wage for our team members. What I’d tell you is the store’s team has always been a point of differentiation for Target and we’ve always prided ourselves and believe we have the best team in retail. So very focused on ensuring we have competitive wages and that we’re developing our team members. We’re all the time assessing the marketplace to determine competitive wages and making adjustments and we feel very confident that we’ll be paying the teams appropriately.”

“Overall as we look at some of the announcements that have been in the marketplace and the minimum wage legislation act really hasn’t changed our view of the quarter or the year really at all and won’t be material changes to us.”

Consumer confidence is definitely up, but we did a good job too

” I think as we sit here today, we’ve recognize that the consumer confidence is certainly improved. Lower gas prices certainly helping the industry overall. We did have some favorable overlaps certainly as we overlap the breach. But I also think we made significant strides from a merchandising standpoint, from a marketing standpoint, and we continue to deliver great execution and service inside the stores.’