Target has flagged a $100 million writedown next year due to excess inventory - but a bold turnaround plan is in the works.
The discount department store has already slashed prices on $200 million worth of stock this half of the financial year.
The price cuts will contribute to a predicted $50 million full year loss for Target.
When he joined Target, recently appointed MD Guy Russo said one third of stores were losing between $1 million to $2 million.
Russo, responsible for the spectacular turnaround of sister brand Kmart Australia, outlined his new vision at a Wesfarmers strategy meeting this week.
The strategy includes the termination of annual toy sales, pet care and luggage categories and all loss-making items.
Target will instead focus on core categories such as apparel and soft furnishings.
The retailer will also recall new-look stores rolled out in NSW, Queensland and Victoria by predecessor Stuart Machin.
The concepts, which included in-store cafes and playgrounds, will instead be remerchandised into selling space.
He issued a stern warning to international competitors, particularly H&M, with plans underway to reduce sourcing costs and end-price for customers.
"I'd love a clean model and H&M has a clean model: the only thing they're not doing right is price," he said.
Russo said the transformation is in its early stages, with changes likely to take affect from June 2017.