Online sales drove the bulk of Target Corp.'s growth during the holidays, but the retailer had to work for it.
The Minneapolis-based company offered free shipping, a sitewide 15 percent off deal on Cyber Monday and other promotions that helped boost its online sales 34 percent in its fourth quarter. That drove Target's comparable sales up 1.9 percent, a better performance than competitors such as Wal-Mart and Macy's.
The trade-off, though, was the heavy discounts cut into margins.
"I think that's the price they had to pay to get back on track," said Ben Marks, president of Minnetonka-based Marks Group Wealth Management, which invests in Target.
Wall Street mostly shrugged it off as Target executives gave a better outlook for sales and profit in the coming year. Target's stock rose 4 percent.
"Given what we're seeing across other department stores and other apparel-related retailers, Target's numbers really stand out, especially compared to Wal-Mart," said Brian Yarbrough, an analyst with Edward Jones. "It's pretty impressive."
Last week, Wal-Mart reported 0.6 percent growth in comparable stores in the U.S. and an 8 percent gain in digital sales. It forecast flat sales for 2016.
Yarbrough also gave Target high marks for invigorating the assortment with more compelling merchandise and displays in areas such as apparel and home decor. "You're seeing exciting merchandise at good values, which is driving the brand again," he said.