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Russo backs Target despite Q1 sales slump

AAP logoAAP 26/10/2016

The boss of Target, Guy Russo, has defended his turnaround strategy after the struggling retailer's revenue slumped in the first quarter.

Target's total sales fell 17.1 per cent to $643 million for the first three months of the 2017 financial year, compared to a year ago, parent company Wesfarmers' trading update shows.

Comparable store sales, which strip out store closures and openings, plunged nearly 22 per cent as the retailer reduced its promotions and stopped its annual toy sale.

Mr Russo, who was given the dual role to lead Kmart and Target in February, defended his decision to dump the popular toy sale.

"The toy sale was an unprofitable event. It involved six months of holding and managing stock and extensive Christmas lay buys" he told an analyst briefing on Wednesday.

"It was the right thing to do for the long term."

Mr Russo said the benefits may be realised in November and December.

He said he will continue with plans to shift away from promotions and towards everyday low prices with a focus on establishing Target as a quality and affordable fashion retailer.

"Kmart will own lower prices on everyday items and Target will be known for amazing fashion and quality and low prices."

He said Target's slowing sales momentum from the fourth quarter of the 2016 financial year continued into the first quarter of the 2017 financial year.

Kmart continues to perform strongly with sales rising 11.2 per cent to $1.2 billion for the quarter.

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