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.’