) announced its year-round price matching policy with the aim of
offering its patrons the facility to match the prices being
offered by online retail giants.
The operator of general merchandise and food discount stores
in the United States, will match prices with
Wal-Mart Stores Inc
Best Buy Co. Inc
) BestBuy.com, and Toysrus.com.
The move comes at a time when most of the brick-and-mortar
retailers are facing significant challenges from online
retailers. Moreover, consumers now compare the price of an item
offered by various companies through smartphones and tablets, and
thereafter make the purchase decision at the best available
As a result, while online shopping is rising sharply,
traditional retailers are losing millions. The changing
environment prompted retailers to develop new sales strategies,
with prime focus on combating online retailers.
According to Target's price matching policy, the customer will
not find any discrepancy in the price of an item bought either
online or at Target stores.
However, if the consumer finds the price of the same item to
be less in the circular issued by Target in the following week,
when the purchase was made or within a span of 7 days on
Target.com or on Amazon.com, Walmart.com, Bestbuy.com or
Toysrus.com or in the printed advertisement of a local
competitor, the company will provide the item at that price.
Target believes that its price matching policy coupled with
REDcard reward program would provide it an edge over its
competitors. However, we observe that the price matching
strategy, which was introduced in the holiday season, did not
fetch the desired results. The company's December
comparable-store sales numbers came in flat that fell short of
management's expectation of a low-single digit increase, although
it showed a marginal improvement over a 1% decline in comps
witnessed in November 2012,
Going forward, the company expects its fourth quarter earnings
to meet or exceed the lower end of its earlier announced guidance
range of $1.64 - $1.74 per share. The current Zacks Consensus
Estimate stands at $1.48 per share for the fourth quarter.
Moreover, the company expects low single-digit increase in its
Currently, we prefer to have a long-term 'Neutral'
recommendation on the stock. Moreover, Target holds a Zacks Rank
#3, which translates into a short-term 'Hold' rating.
AMAZON.COM INC (AMZN): Free Stock Analysis
BEST BUY (BBY): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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