Target to offer more deals, extend free shipping until January

October 25, 2016 3:01 PM EDT

A newly constructed Target store is shown in San Diego, California May 17, 2016. REUTERS/Mike Blake/File Photo


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By Nandita Bose

NEW YORK (Reuters) - Target Corp (NYSE: TGT) will offer more deal-driven promotions and extend its free shipping window to January this holiday season as it looks to turn around performance in what has so far been a lackluster year for the retailer.

Target also expects consumer spending to remain robust in November and December despite uncertainty around the U.S. presidential elections. The holiday shopping season is an important time for retailers during which they earn an outsized portion of their annual profits and sales.

"We are looking at very low unemployment, fuel prices remain low, the commodity pressure on food is down," Chief Executive Officer Brian Cornell told reporters in a meeting on Tuesday. "The overall approach for the consumer is going to be positive this season."

Improving performance during the holiday months is crucial for Target. After a slow first half of the year, the retailer has warned of flat or slightly lower same-store sales for the second half of 2016, as shoppers turn to the internet and spend on big-ticket items like cars and home renovations, rather than small, discretionary purchases that make up the bulk of Target's offerings.

The Minneapolis-based retailer said it will offer more deals this year under its program "Ten Days of Deals."

Target will also extend its free shipping offer until Jan. 1 this year from Dec. 25 last year and drop shipping fees for all online orders for a third year in a row. The retailer currently requires a minimum online order of $25 to qualify for free shipping.

Free shipping boosted Target's digital sales growth to over 30 percent during the fourth quarter last year and is a key strategy that allows it to better compete with rivals like Amazon.com Inc (NASDAQ: AMZN).

Target expects its ship-from-store program, which it has expanded to 1,000 stores from over 400 last year, to speed up delivery times.

The retailer also said it would increase its holiday advertising budget for television, with a special focus on Spanish-language programs, as it looks to bring in more Hispanic shoppers, a traditionally strong consumer demographic for Target.

It expects growth to be strong in the home decor, toy and apparel categories. Target will also focus on selling electronic items like the new Apple Watch. In August, the retailer said low demand for Apple Inc (NASDAQ: AAPL) products hurt electronics sales during the second quarter and that it was working with the iPhone maker to capitalize on new product launches.

(Reporting by Nandita Bose in New York; Editing by Andrew Hay and Jonathan Oatis)



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