Target's Free Shipping This Holiday Won't Come Cheap

Target Corp.'s free shipping offers this holiday, that come without any order minimum, likely won't come cheap for the No. 2 U.S. discounter. While the retailer has seen "a meaningful increase in both orders and conversion" since the announcement, the offer "is not accretive" to profit as any increased sales don't offset the rise in shipping expenses, said Kathee Tesija, Target's merchandising and supply chain chief, on a conference call Wednesday. She said lack of free shipping is Target online customers' "No. 1 frustration" and the main reason for abandoned shopping carts. "It was important for us to be able to take that friction away," she said. "We are pleased with the result so far." Target shares jumped 6.6% after it reported a better-than-expected adjusted third-quarter profit and sales, in report that suggested some customers have returned to the retailer since its data breach announcement last year.

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