Target profit rises as product revamp pays off

NEW YORK (AP) — Target is hitting the bulls-eye.

The Minneapolis-based retailer reported a nearly 52 percent surge in its first-quarter profit on strong sales of fashion and baby products, evidence that its efforts to revamp its product selection are paying off.

The results handily beat Wall Street expectations on all fronts, and Target boosted the bottom end of its annual profit outlook.

Target Corp. is aiming to reinvent itself as a more nimble and innovative company and is trying to reclaim its reputation as a cheap chic retailer under CEO Brian Cornell, who took the top job last year.

Under Cornell, the company pulled the plug on its money-losing expansion into Canada so it could focus on its U.S. business, where it’s made cost-cutting moves including eliminating 1,700 positions. The company told investors in March that it plans to cut $2 billion in costs over the next two years and invest money into its online operations and other endeavors.

Target is also doubling down on a handful of areas like fashion, children’s products and home furnishings. It’s also reimagining its grocery area and wants to focus on organic, natural, gluten-free and locally produced food.

Still, Target Chief Financial Officer John Mulligan told reporters on a call that its business is not getting too much help from an improving economy and lower gas prices. He noted shoppers are using the freed-up dollars to pay down their debts.

“They’ve learned a lot about the recession,” he added.