Target Hits Gains, Will Continue Makeover

"Our fourth quarter marketing and merchandising programs generated better than expected sales growth, particularly in the holiday season, which combined with continued disciplined inventory management to deliver outstanding gross margin and profit performance," Steinhafel said during the company's conference call on Tuesday. The company saw a 0.6% increase in same-store sales in the fourth quarter, he said, though overall same store sales declined 2.5% for the year.

The economy will still have a stifling affect on sales this year, he said. "We expect progress to remain slow as consumers face historically high rates of unemployment and lack of access to consumer credit," Steinhafel said during the call.

Near term growth strategies include the continued renovation of stores to accommodate merchandising reinventions, such as the PFresh introduction of fresh food choices, with remodeling planned in 340 stores. He says the company is also considering smaller stores in areas where retail space is scarce, such as downtown Chicago, and an expansion into Canada, Mexico and Latin America in the next three-to-five years.

The company plans to open 30 new stores this year, though 20 stores will close, with a net of only 10 new stores. Doug Scovanner, EVP and CFO, said during the call that comparable sales figures will go up this year, "perhaps in the of 2% to 4% for the year, including an expected 1% lift from our remodel program."

The executives said strict finance management will keep costs down to help balance the low consumer confidence. Also, the company is trying new marketing measures, such as allowing shoppers in Kansas City who have a Target credit card to receive 5% off of every purchase. The company is still evaluating this incentive before taking it to other markets, Scovanner said during the call.