MINNEAPOLIS-As it faces the need to improve both sales and margins, Target has increased its prices for some soft-home products by double digits, and expects to do so again later this year, according to Kathryn Tesija, executive vice president of merchandising.
Speaking in a conference call to financial analysts yesterday (with comments from a transcript of the call provided by SeekingAlpha.com), Tesija said the first price hikes have already taken effect on spring merchandise. “For the fall, we now believe increases will move into the double digits in both apparel and home, and will affect a greater proportion of these assortments than in the spring,” she said.
The higher tickets are a response to “input cost inflation” on home-product raw materials, Tesija said, coupled with added cost pressure from rising oil prices. “(W)e’re attempting to drive down costs through product design, fabric standardization and optimization of pricing, promotions and sizing,” she said. “However, in some cases, we’ve had to increase retail prices to offset higher costs, and we’ve seen others in the marketplace do the same.”
Yesterday, Target reported a 2.7 percent increase in net income and a 2.8 percent gain in net sales in the first quarter. During yesterday’s conference call, Gregg Steinhafel, chairman, president and CEO, said the company was “not satisfied” with its retail results.
“We are focused on driving sales through major initiatives like our PFresh remodel program and the 5% REDcard Rewards, while driving value and innovation in every category in our stores and online,” Steinhafel said.