Target Corporation TGT is gearing up to redefine itself amid an ever-changing and competitive retail landscape. The company announced a corporate restructuring program that involves trimming the number of employees at its headquarters’ locations, primarily in Minneapolis. Target is laying off 1,700 employees and will make no further recruitments for 1,400 unfilled positions. Management hinted that this will facilitate cost savings of $2 billion over the next two years.
Last week, Target 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, which competes with Wal-Mart Stores Inc. WMT, 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.
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.
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) and Ross Stores Inc. ROST, carrying the same Zacks Rank as Target.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment