Target CFO: We're Sitting Out the Low-Price Wars This Holiday Season

Target Store shoppingDon't expect crazy markdown sales at Target (TGT) when you shop for gifts this holiday.

The trendy discounter will opt out of the price wars during the biggest shopping season of the year. And if that means it loses sales to rival chains, that's OK by Target.

"We're not interested in driving sales for the sake of sales, [so] you might see us lag competitors in terms of comp-store sales increases," said John Mulligan, executive vice president and chief financial officer of Target, during Goldman Sachs' Global Retailing Conference on Wednesday.

Instead, Target is playing up the first half of its "expect more, pay less," promise this gift-giving season, and its raison d'etre: upscale and trendy exclusive collections, most notably a new fashion and home line it co-created with tony Neiman Marcus department stores.

When it came time to plot its strategy for the holiday, a make-or-break period for retailers, Target management pondered, "How do we compete effectively our way?" Mulligan said. "The Neiman Marcus [co-branded collection] brings something that's about fashion and differentiation, which is how we compete in the marketplace, and not focus so much on the lowest price of a 44-inch television."



But even with that buzz-generating product line, Target's business for the remainder of the year will be challenging, he said.

Indeed, sales for the rest of 2012 will trail those from the first half of the year, due in part "to the ultra competitive nature of that [holiday] season, as it relates to driving sales," Mulligan said.

The macroeconomic picture is also dimming the chain's outlook.

Factors ranging from a "very cautious consumer" to the impending fiscal cliff and the presidential election "creates [even] more uncertainty, and uncertainty we don't think is good for retailers," he said.

In turn, the chain has planned its inventory levels conservatively in case shoppers are hesitant to buy. "We have not built in a lot of good news about the economy" into the business plan, Mulligan said.

"We're seeing what the consumer does. Our business will be planned appropriately, given what's going on in the world."





Increase your money and finance knowledge from home

Introduction to ETFs

The basics of Exchange Traded Funds and why ETFs are hot.

View Course »

Investment Strategies

What's your investing game plan?

View Course »

Add a Comment

*0 / 3000 Character Maximum

956 Comments

Filter by:
deserthearts88

Target would have a heck of a lot more sales, if they would be a little bit more COUPON FRIENDLY........Let the manufacture give the discounts!!!! Stop putting stupid limits of 4 like coupons & actually TEACH management & employees what "One Coupon Per PURCHASE" means......Long time couponer....

November 06 2012 at 1:54 AM Report abuse rate up rate down Reply
Erin Morris

I support your decision! You know why, cause I have NEVER been to a black Friday event so whether or not you participate it wont matter me. I will still enjoy your store on a normal day with normal prices.Type your comment here

October 26 2012 at 1:02 PM Report abuse rate up rate down Reply
Rose

I never found their BF sales that impressive anyway, but this is kind of insulting to the holiday consumer. To me it says WE COULD CARE LESS AND ARE CHARGING YOU MORE - SO THERE. At least Wal Mart owns what it is, low prices and no frills shopping.No one expects anything more. And if I want Neiman Marcus, I will GO TO Neiman Marcus

October 26 2012 at 9:58 AM Report abuse rate up rate down Reply
Elizabeth

Okay, Target, my former favorite store, I will be doing my Christmas shopping elsewhere. The fashions you sell tend to be poorly made and do not last, not even the fashion t-shirts. We do not like plastic shoes even if they are cute. Unless you improve the quality of your trendy home (flimsy sheets) and fashion items, you will likely regret your move. No deep discounts at Christmas, especially in the electronics and toy departments will keep me out of the store. By the way, your food prices are very inconsistent some much more than the grocery store, some a wee bit less, so we do not buy groceries at Target either. A lot of people have noticed this and your grocery department is not thriving. Lots of designer cheaply made clothes and household items are on the bulging final sale racks, but my discount name brand TV is going strong! We do not have a Walmart, but when I am near one I am always impressed by their selection and prices (if not quality), and K-Mart is improving, so Target may beware. I liked the old high quality Target where the clothes held up for more than a couple of washes, prices were good, and quality usually surpasssed the competitors, especially clothes, but no more!

September 16 2012 at 8:16 PM Report abuse rate up rate down Reply
Janey

OOPPSS.......I meant NOT shop there why bother now? Plus their holiday merchadise is getting very cheap looking (think Kmart). The first year they were open in my area I did buy some nice things now its too gaudy and cheap looking.

September 16 2012 at 9:07 AM Report abuse rate up rate down Reply
Janey

I agree another dumb strategy. Consumers will go elsewhere for a better deal. If I wanted Nieman Marcus I would shop there not Target. Consumers want the best price and there are too many ways to find that price (internet/price grabbers, smartphones, advertisements). I would be shopping at Target this Christmas season. Yes, I said Christmas.

September 16 2012 at 9:04 AM Report abuse rate up rate down Reply
Janey

Hmm...When people leave a retailer for a better deal elsewhere they usually don't go back.

September 16 2012 at 9:01 AM Report abuse rate up rate down Reply
hortonsbks

I love Target and will continue to shop there. Our store is spotless, unlike the Wally World places in this city.

September 15 2012 at 7:59 AM Report abuse rate up rate down Reply
johnd9442

Another "shoot yourself in the foot" strategy from an out of touch CFO. What corporate executive gives consumers forewarning about their competition being a better choice? Does Target have a Board of Directors? If so, are they aware of this fool?

September 12 2012 at 3:48 PM Report abuse rate up rate down Reply
alltune4u

Well, good for you Target. You lost me years ago anyway when you decided to raise my credit card rate from 9.99% to a whopping 22.9%. Why, because you needed the ones that had been paying there credit cards to make up for you losses for those that didn't. I wait to dance on my cut-up Target credit card when I see you suffer the same.

September 12 2012 at 12:03 AM Report abuse rate up rate down Reply