UPDATE 2-Target beats and sales forecasts in sign strategy working

Wed Feb 25, 2015 11:31am EST
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(Adds CFO comments on investments, cost cuts, online business)

Feb 25 (Reuters) - U.S. retailer Target Corp reported a stronger-than-expected jump in fourth-quarter sales and profits and forecast modest growth this quarter in a sign that its online business strategy and focus on promoting select categories is working.

The company said it had enjoyed strong sales of apparel and products for children and babies, a reflection of its move to expand a few product lines in which it believes it can outsell the competition on quality and price.

Its online business contributed to a quarter of the growth in same-store sales, helped by waiving all shipping costs on orders during the Christmas holiday season.

Similar to other retailers lower fuel prices also helped, Chief Financial Officer John Mulligan told a media call.

Shares of Target were down 0.8 percent at $76.24.

Target will announce investments in focus areas at an analyst meeting on Tuesday as well as cost cuts to fund them, Mulligan said. He did not say whether it may cut jobs.

Target said comparable sales at stores open longer than a year rose 3.8 percent in the November-January quarter. That beat its forecast, unveiled just five weeks earlier when it announced an exit from the Canadian market, for a rise of 3 percent.

"No one was more surprised than me," Mulligan said. "Sales were incredibly strong in those last two weeks."   Continued...