Target to Focus More on Areas Beyond Grocery Business

As per sources, Target Corp.TGT has recently made it clear that it does not want to focus exclusively on its grocery business. While grocery will continue to be an integral component of the company's business, Target intends to concentrate on other revenue generating areas. The company plans to invest in merchandise categories such as Style, Baby, Kids and Wellness that have been performing well.

The company's grocery business has been under tremendous pressure on account of a deflationary environment and stiff competition. Nevertheless, management has undertaken several strategic initiatives such as improving assortments, quality, freshness and presentation to drive sales. However, the efforts will take time to yield results.

The company intends to deploy resources to significantly develop its online platform as well as store facilities to make shopping more convenient. Moreover, with customers shifting rapidly to online, it is becoming increasingly important for Target to develop sturdy omni-channel facilities to stay afloat.

Target, which currently carries a Zacks Rank #3 (Hold), has also adopted an aggressive cost reduction strategy, including the rationalization of its supply chain, technology and process improvement, and corporate restructuring. The company continues to lay emphasis on developing flexible format stores to penetrate deeper into urban areas. We believe this approach will help the company to enhance its sales without substantial capital investment. These types of stores generally have higher sales productivity.



Stocks that Warrant a Look

Investors may consider better-ranked stocks such as Big Lots Inc. BIG , Burlington Stores, Inc. BURL and Ross Stores Inc. ROST , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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