Target made several bets that paid off in the fourth quarter, and expects its investments to continue to propel it to success, Chief Financial Officer John Mulligan told CNBC on Wednesday.
Earlier in the day, the retailer reported a stronger-than-expected jump in same-stores sales and profits. Comparable sales at stores open longer than a year rose 3.8 percent in the fourth quarter, which was a "pleasant surprise," Mulligan said in an interview with "Power Lunch."
He attributed the strength to several factors, including discounted gift cards sold on Black Friday being used in January, stores bouncing back quickly from the holiday season with new products and the retailer's investment in wellness, which was important for those looking to start the new year in a healthy way.
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In addition, cutting Target's free-shipping minimum for Internet purchases from $50 to $25 is "one of the best investments we can make," Mulligan said.
"When we look at a guest who shops our stores routinely, if we can convert them and get them to shop online, automatically we get more sales because they're shopping online. But they actually increase their engagement with us in the store with us as well," he explained.
Mulligan said that means a significant increase in both sales and gross margin dollars or profitability with that guest.