Target reaffirms 2018 outlook as it makes online push

NEW YORK, May 23 (Reuters) - Target Corp shares pared losses to trade down 5 percent on Wednesday as investors weighed a lower-than-expected quarterly profit against the retailer's unchanged full-year outlook.

Price cuts and ongoing investments to ward off competition from Amazon.com Inc and brick-and-mortar rivals continued to hurt profitability in the first quarter even as comparable sales beat estimates and online sales accelerated from a year earlier.

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8 insider facts about shopping at Target
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8 insider facts about shopping at Target

Target has a state-of-the-art forensics program to catch shoplifters, among other things

Apparently CSI: Target is a thing.

The retail chain runs two forensic labs, one in Minneapolis and the other in Las Vegas. On its website, Target said its investigators solve cases through "video and image analysis, latent fingerprint and computer forensics."

In a 2008 article profiling the Target Forensic Services team, Forbes reported that 70% of the lab's time is spent looking into fraud, theft, and personal cases.

But Target investigators have also assisted law enforcement agencies on a number of armed robbery, kidnapping, and homicide cases, according to Minnesota Public Radio.

People who said they've worked at Target before took to Reddit to note that the stores tend to have state-of-the-art camera surveillance.

"The resolution on those things was insane," one Reddit poster wrote.

"I worked at Target in the early nineties and it was insane then," another Reddit user added. "Twenty years later and I wouldn't be surprised if they weigh me as I enter and as I leave to determine if I'm shoplifting."

Be nice to employees — it might pay off.

Sometimes, it pays to be nice.

Business Insider's Kate Taylor previously reported on a viral blog started by Target employee Tom Grennell.

He wrote about working during a special sale when his Target store was giving out a 10% discount on all purchases. The only catch? Shoppers had to ask for the discount.

"I have a coupon to scan if anyone asks for it. I scan it if people don't ask for it if they're nice to me," Grennell wrote. "I don't scan it if they're rude. Power is a new sensation. Power is a good sensation."

You can't necessarily spot a clearance item by its price tag.

The website Truth or Fiction threw cold water on the idea that prices ending in certain numbers indicate clearance items at Target.

"The ending digit of a clearance price is determined by several factors including the original retail price and the applied percentage discount," former Target PR rep Evan Lapiska told Truth or Fiction. "It is not possible to determine the final markdown or timing of the price change from the item's current price."

The website also debunked the idea that Target's mark downs run on a weekly schedule.

Target cashiers are motivated to do a speedy checkout.

Target cashiers are reportedly under pressure to check you out as quickly as possible.

Former Target cashier and Quora user Ashley Zurita wrote that, "Target has a system where they time you on how fast you get a customer through check out."

She said that employees go through weekly evaluations, during which they're given either a red, yellow, or green designation.

"If you get the color red, it means you are moving way too slow and not meeting the standards for checking people out through the line fast enough," Zurita wrote. "You can also be yellow, which means you are still not getting the customer checked out fast enough and you need to improve your time. Then there is green. If you get the green color you are doing a good job and keeping a fast pace checking out customers."

She said that failing to achieve green more than twice in a row can cause a Target cashier to be moved to a stocking role.

You can use Target to get rid of gift cards.

Got gift cards that you'd just like to get rid of?

At participating Target stores, you can swap out unwanted gift cards from brands like Bed, Bath, and Beyond; Costco; Sam's Club; Nordstrom; and more. Just head over to the store's mobile phone counter.

Buzzfeed reported that you "won't get 100% of the card's value — you might even get less than online offers," however.

Employees see some pretty strange stuff on the job.

One Target employee told Cosmopolitan about a shopper who angrily knocked over a soap display after employees complied with local laws by refusing to sell her alcohol after 9 p.m.

Another employee described watching a group of teenagers drag some bean bag chairs into the middle of an aisle and proceed to eat snow, according to Cosmopolitan.

And a third Target employee recalled a customer who returned three full bags of groceries because "her kids didn't like" her purchases, Cosmopolitan reported.

Target employees say the rules around uniforms are pretty lax.

Target employees aren't given uniforms. Instead, according to the blog Tough Nickel, they must wear khaki pants or skirts and completely red shirts. 

Former Target employee and Quora user Brian Walsh wrote that the chain doesn't "... care about the shade of red. Some of my coworkers had shirts that were closer to maroon."

To be sure the person you're approaching for help is an employee and not a shopper, look for a name tag first.

Employees get 20% off on fruits and vegetables.

Target employees get a 10% discount on store and online purchases.

But they get a significantly larger discount on other items.

Target employee and Quora user Nelson Brown wrote, "Your team member discount card gives an additional 20% off on fresh and frozen fruits and vegetables, and any 'Simply Balanced' store brand products. Makes the prices for those products a lot more competitive."

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The company's operating income continues to reflect near-term challenges driven by last year's investments to transform the business, Chief Executive Brian Cornell said on an conference call to discuss earnings.

Target has poured billions of dollars into aggressively promoting its products and keeping grocery prices low to compete with rivals like Walmart Inc and supermarket chain Kroger Co.

It cut its next-day delivery fee for household essentials to $2.99 from $4.99 last week and waived it altogether for customers paying with a Target credit card.

The retailer said on Wednesday it is rolling out a new drive-up service at its stores, where shoppers can pick up their orders in an hour.

It is also expanding its delivery services through Shipt, a same-day delivery company it bought for $550 million last year, and said it is partnering with courier services on same-day orders in dense metro areas.

The pressure to deliver items faster has intensified since Amazon's purchase of Whole Foods, which has rattled the grocery industry on worries the online seller will be able to quickly ramp up delivery of fresh food.

Last week, Whole Foods debuted a loyalty program for Amazon Prime customers and Kroger said it would partner with British online grocer Ocado to build robot-operated warehouses to support U.S. home delivery.

Target has said it plans $3 billion of capital expenditure this year on investments in its supply chain, online delivery, its own brands and merging online and in-store shopping.

The retailer held on to its full year forecast of a low to single digit increase in comparable sales, and adjusted earnings of $5.15 to $5.45 per share.

MARGINS SLIP

The company's operating income margin weakened to 6.2 percent from 7.1 percent the same period a year ago.

Gross margins remained under pressure at 29.8 percent compared to 30 percent last year. The measure had hit a 20-year low of 26.2 percent in the fourth quarter. First-quarter same-store sales came in slightly higher than estimates, rising 3 percent, driven by traffic that grew at the strongest pace in a decade. Analysts expected a 2.9 percent increase, according to Thomson Reuters I/B/E/S.

In February last year, Target said it would reinvest more than $7 billion through 2020.

Online sales rose 28 percent in the first quarter, up from a 21 percent rise during the same period a year ago but short of the 29 percent rise during the fourth quarter.

The company has also focused on doubling the number of so-called small-format stores with a narrower selection of products aimed at urban buyers.

Excluding items, Minneapolis-based Target earned a profit of$1.32 per share in the quarter ended May 5, below the average analyst estimate of $1.39.

The big-box chain forecast adjusted earnings of $1.30 to $1.50 per share for the second quarter, compared to the average analyst estimate of $1.35 per share.

Its first-quarter selling, general and administrative expense rate rose to 21.1 percent of sales compared to 20.7 percent a year ago, driven by higher compensation costs and wage hikes for hourly employees.

In October, the company said it would raise wages for hourly workers to $12 per hour this spring and to $15 by 2020.

Target's revenue rose to $16.78 billion, topping the average estimate of $16.58 billion.

Shares of the Minneapolis-based chain have risen 16 percent since the start of the year and more than 35 percent in the past 12 months.

(Reporting by Nandita Bose in New York; Editing by Meredith Mazzilli) 

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