) recently unveiled its plan of opening a CityTarget store at the
Beverly Connection in Los Angeles, California, spanning across
99,000 square-feet. The new store is slated to be opened in March
2013 and it will be the third CityTarget in the Los Angeles area.
It will employ approximately 200 associates and serve as a one-shop
The other two small-format locations are scheduled to be opened
in 2012, one in Westwood Market Place in Westwood, California, in
July, and another at Figueroa in Los Angeles in October.
Target, which currently operates 58 outlets in Los Angeles, also
plans to open four smaller format stores, one each in Chicago,
Seattle and San Francisco in 2012 and the fourth one in Portland in
In order to tap the urban markets where real estate remains a
constraint, Target introduced CityTarget stores. The company
informed that the new stores will vary in size from 60,000 to
100,000 square feet compared with its typical format of
125,000-180,000 square feet.
Earlier, Target used to concentrate on the suitability of its
large-format stores for a particular location, which lowers its
accessibility to the country's thickly populated and space-crunched
urban regions. However, with the changing business scenario and
rising competition, Target felt the need to have stores of various
sizes and formats to align with the targeted area. We believe that
the approach will help the company to augment its sales.
Target is persistently trying every means to keep afloat in this
sluggish economic environment. The company's P-fresh remodel
program, 5% REDcard Rewards program, City Target stores, The Shops
at Target initiatives and its foray into the foreign market are its
arsenal to safeguard itself from any unprecedented events.
Target's efficient marketing, multi-channel strategy, product
innovation, compelling pricing strategy, and new merchandise
assortments should drive comparable-store sales and operating
margins in the long term. We expect the company to gain market
share, and believe that more focus on consumable items should boost
sales and earnings in a sluggish consumer environment. The
company's long-term objective is to attain $100 billion or more in
sales and $8.00 or more in earnings per share by 2017.
The economy has not yet recovered fully. It is evident that the
company's customers remain sensitive to macro-economic factors
including interest rate hikes, increase in fuel and energy costs,
credit availability, unemployment levels, and high household debt
levels, which may affect their discretionary spending, and in turn
curtail the company's growth and profitability.
Moreover, a greater concentration of the company's revenue
generating capabilities in limited regions of the United States
poses a competitive threat to Target, compared with
Wal-Mart Stores Inc.
Costco Wholesale Corporation
), which are geographically diverse and more resourceful.
Consequently, Target is focusing more on store renovations and
improving store sales productivity. Further, with the ever changing
consumer preferences, the company feels the need to adapt to the
demands of time and consider consumer-oriented strategies.
In separate news, as reported by
The Wall Street Journal
, Target will no more sell Kindle e-reader and other products of
). The decision came on the heels of heightened competition between
online retailers and brick and mortar outlets.
The online retailers are gradually encompassing new merchandise
categories under their purview and offering huge discounts on
products with shipping services to attract customers, thereby
threatening brick and mortar sales. The move is also seen as a part
of Target's strategy to fill its shelf space with more
Currently, we maintain our long-term Neutral recommendation on
the stock. Moreover, Target retains a Zacks #3 Rank that translates
into a short-term Hold rating.
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