Target woes continue

Embattled department store Target is set for a tough winter, with more clearance activity planned.

The news comes as the company behind the retailer, Wesfarmers, has denied plans to convert all Target stores into its more successful sister brand Kmart.

Instead, it will convert some underperforming sites in Target's 300 store network into Kmart locations, which has 200 stores across Australia and New Zealand.

Kmart recorded total sales for the third quarter of $1.1 billion, a increase on 17.9% on the previous corresponding period.

For the financial year to date, total sales increased 13.9 per cent to $3.9 billion, while comparable store sales increased 10.8 per cent.

Meanwhile, struggling Target recorded weaker trading through the third quarter, driven largely by lower sales in womenswear and underwear.

Wesfarmers department stores division CEO Guy Russo said sales of homewares were also below the prior corresponding period, where price investment more than offset volume growth.

“Due to declining sales momentum, including poorer than expected sell-through of some summer lines, targeted clearance activity was undertaken late in the quarter, further affecting sales and margins,” he said.

“Higher clearance activity is also expected in the fourth quarter, with further risk in relation to winter categories.”

Russo confirmed that following the recent creation of the Wesfarmers Department Stores division, a strategic review of the business is underway.

"Ahead of this work being completed, Target’s results for the fourth quarter are expected to include the effects of a number of initiatives aimed at establishing a stronger platform for the longer term business turnaround."

During the quarter, Target opened one new store and completed three store renewals.