Target Canada hoping holiday season will turn around struggling store launches

The shadow of Target Canada's John Morioka is cast on a company-branded backdrop, as the chain shows off its brands and design partners at a showcase in Toronto in this January 2013 file photo. (Chris Young/THE CANADIAN PRESS)

Whether shoppers warm to Target Canada over the holiday season could determine if the U.S. retailer decides to stick with its current strategy for turning around the performance of its struggling Canadian operations.

"We need to get through the fourth quarter and assess how the business progresses," Target Corp. chief financial officer John Mulligan said Wednesday in a conference call with the media.

"From that point on (we will) assess where we are and what we think the long term is."

The retailer has been trying to recover from a botched entry into Canada that has been hindered by an inventory management system that left shelves empty, and a perception from customers that products are overpriced compared with competitors like Walmart.

Target has been trying to improve its reputation and fix some of the problems that have hindered the performance of its 133 stores, which were opened across most of the country starting in March 2013.

"While we've seen progress in Canada, our results remain unacceptable," Mulligan said. "We need to see a step-change in performance there."

In Target Corp's latest financial results, the Minneapolis-based company said its Canadian operations -- the company's first international expansion -- have improved ahead of the holiday season with changes to its pricing and product assortment.

Overall, Target Corp. reported a 3.1 per cent gain in third-quarter profits to beat Wall Street expectations as its U.S. business rebounded from a massive data breach that occurred just before Christmas last year.

The results are encouraging as the discount retailer gears up for annual shopping season that begins in late November, when U.S. Thanksgiving is held, and continues through to the New Year period.

Target's previous CEO, Gregg Steinhafel, was ousted in May and replaced in August by former PepsiCo executive Brian Cornell, who has the job of reclaiming the retailer's image as a purveyor of cheap chic fashions and home decor.

Target reported earnings of 55 cents per share, or US$352 million, for the three-month period ended Nov. 1. That compares with 54 cents per share, or $341 million, in the year ago period.

The results beat Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 47 cents per share.

Target's revenue rose 2.8 per cent to $17.7 billion. Analysts expected $17.53 billion, according to Zacks.

The company posted a 1.2 per cent gain in revenue at stores opened at least a year. That was better than Target's expected range of unchanged to up 1 per cent. It marked the first increase in that measure since the third quarter of fiscal 2013.

With files from The Associated Press