Only 2% of the population listens to, or reads the transcript of, a public company’s quarterly earnings call (source: Lairig Marketing BS estimate). So make that your competitive advantage as you plan your own marketing strategies. Let’s use Target’s most recent earnings call as an example of the insights available to an inquiring marketing strategist.
But first, the backdrop. Last November, we accurately predicted that “Black Friday” would lead retailers nowhere:
“After that, the season will belong to the 53%. That is when the winners will separate from the losers. Keep your eye on Target, who plays the 47% and the 53% right down the middle. How Target does this holiday season will (or should) dictate its 2013 marketing strategies.”
So, how did Target do? And what did it learn? It all went as we forecast, and it was spelled out in the fourth quarter earnings call. It’s heady stuff, so we’ll break the analysis into two parts, maybe three. Come back tomorrow for Part 2.
It’s The Barbell, Dumbbell
It couldn’t have been scripted any better. The holiday shopping season is now a self-fulfilled prophesy for marketers who have blindly embraced Black Friday and, of course, this year’s Black Thursday/Thanksgiving. Here is Kathy Tesija, Target’s EVP of Merchandising:
“…our holiday season sales became even more concentrated around Black Friday and in the days leading up to and just after the Christmas holiday.”
>>>What We Expect To See, Generally: JC Penney to shut its doors between December 2 and 19. It will cost more to keep the lights and heat on than revenues can cover during that timeframe.
>>>What Target Will Do: “...we think that the opportunity to pick up sales is really the other three quarters. And in particular, the second and third quarters this year.”
So take your standard “retailers do 40% of the year’s business during Christmas” and shove it up your stocking. If any retailer has more initiatives planned to roll out over the next six months than Target, we’d love to know who it is.
Flat Is The New Black
Target was able to tack a good January onto a crap holiday season, and end up with comparable store sales that, as CEO Gregg Steinhafel reported:
“…fourth quarter comparable store sales in our U.S. retail segment grew 0.4% compared with an expected increase of 2-3%.”
>>>What We Expect To See, Generally: The correlation between Wall Street and Main Street has now hit a perfect “minus one.” Walmart is pretty much flat on its back, waiting for a stroke of luck with its target segment – maybe gas prices can fall 25 cents a gallon over the near term as predicted, for example.
Meanwhile, at the other end of the spectrum (see: rich people), Coach stunk out the joint during the holiday season in North America, with a drop of 2% in comps. It forecast flat comps going forward, and its stock price was taken to the leather shed.
TARGET SITS IN THE BIG FAT MIDDLE.
>>>What Target Will Do: “We’re planning full year 2013 comparable store sales to grow in line with our 2012 rate of 2.7%.”
Given the certain uncertain economy, we’d call that “aggressive.” But after reading Target’s earnings transcript from top to bottom, twice, we’ll modify that as “confident” aggression.