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Target has remodeled toy sections in more than 100 stores, including 22 in Minnesota, to capture toy sales following the closure of Toys 'R' Us.

Target has remodeled toy sections in more than 100 stores, including 22 in Minnesota, to capture toy sales following the closure of Toys 'R' Us. (Brian Peterson/Minneapolis Star Tribune/TNS)

Holiday sales jumped 5.7 percent at Target Corp. during the November-December holiday shopping season compared to a year ago, fueling what could be the retailer's largest full-year sales gains since 2005.

The boost came as more people hit stores and shopped online, the retailer said Thursday, noting that the average amount shoppers spent increased only slightly.

The company's shares fell nearly 4 percent on pre-market trading, however. Some analysts pointed to disappointing results from Kohl's, which announced holiday sales grew a slight 1.2 percent. The lackluster performance may be stirring fears that consumer spending may not be as healthy as hoped against a backdrop of a volatile stock market and talk of trade wars.

Target is expected to report its fourth quarter and year-end results in early March. The company maintained its earlier guidance of fourth-quarter comparable sales growth of 5 percent and full-year adjusted earnings per share between $5.30 and $5.50.

"This performance demonstrates the benefit of placing our stores at the center of every way we serve our guests, including both in-store shopping and digital fulfillment," Target Corp. chief executive Brian Cornell said in a statement.

Target also announced a series of management moves that involve a half dozen senior executives.

Among the announcements: Chief Financial Officer Cathy Smith will retire as soon as the company names a successor. Smith came to Target from Express Scrips in 2015, a year after Cornell became CEO, and will serve as an adviser until May 2020.

Target also created a new position to oversee the company's food and beverage division, and named Stephanie Lundquist, the current head of human resources, to the post.

Many of the nation's major retailers are expected to announce holiday results this week in what has long been forecast as a bumper year of sales growth.

In December, Mastercard SpendingPulse said that U.S. retail sales rose 5.1 percent between Nov. 1 and Dec. 24 from a year earlier. The figures include online and in-store spending across all forms of payment.

Another measure, the weekly Redbook Index, showed retailers gained at least 6.1 percent over last year's holiday season.

For Target, it's the second year of strong gains during the crucial period. In 2017, Target's November-December sales were up 3.4 percent, giving it a healthy two-year upswing of 9 percent.

All major categories had sales increases, but the company highlighted gains in toys, baby products and low-priced seasonal gifts sold at its kiosks and end-caps.

But the "star of the show" was a 29 percent spike in digital sales from mobile shopping and its website, said Neil Saunders of GlobalData Retail in a morning note.

"In our view, a lot of this comes down to the various deals Target offered on delivery as well as the strong marketing around online ordering," he said. "While we did have some concerns about the impact this push may have on profits, most of the digital uplift appears to have come from store-based collections. As these are higher margin, it has eased our worries considerably."

Minneapolis-based Target is on the final stretch of a three-year $7 billion structural overhaul that includes updating its technology, reformatting stores and changing how it ships and delivers packages.

For the holidays, Target promised free, two-day shipping with no minimum orders and doubled the number of seasonal hires to tackle digital sales in both stores and distribution centers.

While Wall Street remains edgy about the hit to profit margins to compete with Amazon for speedy and low-cost delivery, Target officials said the payoff is becoming evident.

Shoppers saved the company shipping costs by picking up merchandise themselves on about a quarter of those sales. Target said its in-store pickup and drive-up services grew about 60 percent compared to last year.

With many of its stores now redesigned to accommodate more efficient boxing and packaging of online orders, Target said three out of four online orders were mailed from a store.

Digital sales remain a small but growing part of the retailers' overall mix - accounting for 6 percent of total sales through the third quarter.

Visit the Star Tribune (Minneapolis) at www.startribune.com

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