Target Corporation
(
TGT
) plans to sustain its remodeling program at existing general
merchandise locations this year by adding an expanded food layout
along with a deeper assortment of dry dairy and frozen items,
improved store layout and enhancement of in-store shopping
experience across departments, such as apparel, home, beauty, shoes
and baby.
During fiscal 2011, Target remodeled 400 locations, bringing the
total count to 900 stores. In 2012, the company plans to complete
about 230 more general merchandise remodels in the U.S. that will
result in more than 1,100 remodeled stores by the end of the
year.
Target recently initiated remodeling program across 90 general
merchandise stores located in the markets of Des Moines, Iowa; El
Paso, Texas and Dayton, Ohio, which is slated to be completed on
June 24, 2012. Currently, about 1,000 stores having a dedicated
floor space of approximately 10,000 square feet are offering
expanded grocery items.
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 macroeconomic 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.
(
WMT
) and
Costco Wholesale Corporation
(
COST
), 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.
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.
COSTCO WHOLE CP (
COST
): Free Stock Analysis Report
TARGET CORP (
TGT
): Free Stock Analysis Report
WAL-MART STORES (
WMT
): Free Stock Analysis Report
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