Lacklustre trading over Christmas hasn’t cast a shadow over discount retailer Target as it gears up for its first international foray.

Target largely lost out over Christmas, reporting its weakest holiday performance since 2008.

A 0.4% fourth-quarter like-for-like gain was eclipsed by Walmart (1%) as the latter took an extremely proactive strategic stance to end the year.

For Target, this marked a disappointing end of what was otherwise a strong year, in which sales climbed 5.1% overall to $72bn (£47.79bn), or 2.7% on a comparative basis.

Target might have lost the festive battle, but it is winning others. While Walmart has had a difficult start to the year - according to information leaked in an email and subsequently confirmed at its fourth-quarter results presentation - Target has rebounded strongly despite the impact on the US consumer of payroll tax increases.

While a more affluent customer base provides Target with a greater degree of insulation from toughening economic headwinds, it is nevertheless scoring well on its own terms.

Under the auspices of its Expect More brand promise, the Prabal Gurung for Target limited-edition womenswear designer collection has proved a hit. Similar successes have been reported in exclusive lines in beauty (NP Set and Pixi) and home goods (Nate Berkus).

Details are also emerging on the retailer’s long-awaited maiden venture overseas. In April, the first Target stores will open their doors to Canadian shoppers.

Some 124 locations will become operational this financial year, with more to follow in 2014. The retailer is aiming for a network of 200 Canadian stores and Planet Retail projects that Target could generate sales of $6bn (£3.98bn) by 2017.

The marketing effort is already under way. Target’s first Canadian TV advertising spot aired during the Oscars, broadcast on February 24. It has also teamed up with high-profile Canadian clothing brand Roots Outfitters for limited-edition collections and is accepting online applications from Canadian shoppers for its Redcard loyalty discount scheme.

But Walmart too is gearing up for battle north of the border. Last year it undertook a record store opening programme in Canada in its near-20 years of trading there, and a further 37 projects in the pipeline this year.

Canada might be the butt of many an American joke, but two of the US’s largest retailers are certainly taking it seriously.

  • Stephen Springham, senior retail analyst, Planet Retail.

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