Target Corp. TGT is an industry leader in the discount retail business across the U.S. The company provides an array of goods ranging from household essentials and electronics to toys and apparel for men, women and kids. It also houses food and pet supplies.
The company has undertaken several strategic initiatives to boost its performance and intends to further deploy resources to significantly develop its online platform as well as store facilities to make shopping more convenient for customers. Target has also reduced minimum value for free shipping to $25. Moreover, the company plans to expand its merchandise assortments with special emphasis on Style, Baby, Kids, and Wellness categories that are performing well.
Further, the company has adopted an aggressive cost reduction strategy. Target had earlier unveiled its plan to achieve $2 billion in annualized costs over the next two years through rationalization of operations, supply chain, technology and process improvements. Extensive corporate restructuring will also help in achieving the cost reduction target.
Moreover, Target is laying emphasis on developing smaller format stores to penetrate deeper into urban areas. We believe this approach will help the company to augment its sales without substantial capital investment.
Additionally, with an aim to capture the booming online grocery delivery market, Target has teamed up with popular online grocery delivery service Instacart. The company will initiate the facility in its hometown Minneapolis by offering same-day delivery of grocery and home goods. We believe this is a smart move by Target, considering the increasing demand for online grocery delivery.
Target, which shares space with other retailers like Big Lots Inc. BIG, Burlington Stores, Inc. BURL and Dollar Tree Inc. DLTR, appears compelling from the earnings perspective too, as it continued with its positive earnings surprise streak for the fourth straight quarter. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by an average of 8.6%, including a positive surprise of 9.9% registered in second-quarter fiscal 2015.
We are encouraged by the growth initiatives undertaken by the company to boost its top line and expect it to sustain the good performance.
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