Target’s comeback strategy is working

By Nathaniel Meyersohn, CNN

New York (CNN) — American shoppers are brushing off higher gas prices and finally spending money at Target again.

Target’s comparable sales, which include both those at stores and online, grew 5.6% during its latest quarter — its best results in four years. The company raised its sales guidance for the year, signaling it believes customers will keep coming.

Target said Wednesday that its gains were spread evenly across income groups and merchandise, including nonessential categories like toys and beauty.

Target’s results were consistent with broader strength in the retail sector. Retail sales have climbed for three consecutive months, even in the face of rising energy costs. A healthy labor market and higher tax refunds have bolstered spending.

“Our consumer is a microcosm of the American consumer,” Target chief executive Michael Fiddelke said on a media call Tuesday. “We see a consumer that continues to be resilient.”

Fiddelke took over as Target CEO earlier this year and pledged to turn around the struggling retailer. Competition from Walmart and Amazon has intensified in recent years all while Target made a series of strategy mistakes. The retailer scaled back Pride displays and rolled back DEI programs, angering its liberal customers.

Unlike Walmart, known for the best prices, or Amazon, which has stood out with convenience, Target wants to remind shoppers it has a fun, treasure hunt atmosphere in stores where they come in to find what’s new.

Fiddelke’s strategy to win back shoppers with new, buzzy brands in stores appears to be working. The company said collaborations with brands like Pokémon and Parke, a favorite of social media influencers, helped drive foot traffic last quarter.

“We believe Target should regain market share as it progresses,” retail analyst Joe Feldman from Telsey Advisory Group said in a note to clients this week.

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