It seems that Target Corporation TGT is gearing up to redefine itself amid this ever-changing and competitive retail landscape. The company recently announced certain strategic measures with a clear vision to put itself on the growth trajectory and rebrand its image after a hacking scandal and discontinued Canadian operations.
Target now intends to deploy resources solely in the domestic markets and focus on developing its omni-channel capacities. The company’s strategies also include effective price and inventory management, along with product diversification.
Per sources, the company now plans to add organic food, craft beer, granola and Greek yogurt to its offerings, with an aim to attract young, urban customers. The company also intends to invest in merchandise categories such as Style, Baby, Kids and Wellness.
Target is now focused on developing an online portal in order to keep up with the changing trends and also to boost its revenues. At the same time, it is adding more products to its online assortment and providing free shipping on a minimum purchase of $25.
Management highlighted that capital expenditures of $2–$2.2 billion projected for fiscal 2015 include $1 billion for technology and supply chain enhancement. This will help augment online sales and spur total projected sales growth of 2%–3% and comparable sales growth of 1.5%–2.5% in the current fiscal year.
As far as the company’s store expansion program is concerned, Target continues to lay emphasis on developing smaller format stores like TargetExpress and CityTarget to penetrate deeper into urban areas. Earlier, Target concentrated on large format stores for a particular location, which lowered its accessibility to the country’s densely populated urban regions and space-crunched cities. The company plans to open 8 TargetExpress locations in the current fiscal year.
Apart from its strategic endeavors, Target also announced a corporate restructuring program that involves trimming the number of employees at its headquarters’ locations. Management hinted that this will facilitate cost savings of $2 billion over the next two years. Per sources, management now envisions adjusted earnings of $4.45–$4.65 per share for fiscal 2015. The current Zacks Consensus Estimate for the fiscal is pegged at $4.51.
Target currently carries a Zacks Rank #2 (Buy).
Other Favorably Ranked Stocks
Other favorably ranked stocks include Burlington Stores, Inc. BURL, sporting a Zacks Rank #1 (Strong Buy), Fred's, Inc. FRED and Ross Stores Inc. ROST, both carrying the same Zacks Rank as that of Target.
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