Target: home leading the way so far

Don Hogsett, May 27, 2002

Minneapolis — Following its brief annual shareholders meeting here last week, Target Corp. chairman and ceo Bob Ulrich told reporters that he sees retail spending in 2002 remaining at "a reasonable level" but that he does not believe that the economy is fully back on track. The company expects to turn in a "strong profit performance" during the first three quarters of the year with fourth-quarter results expected to be on par with last year.

In the home area the next big initiative for the Target Stores division will be the rollout of domestics and hard home product from designer Todd Oldham. "He brings an exceptional taste and design to the merchandise," said Target Stores president Gregg Steinhafel.

Ulrich described the program as directed at the "going back to college crowd. Those guests will stay with us for many of their needs."

In terms of overall store performance, Steinhafel said that, so far this year, home and consumables have been the leading categories in the discount store operation.

And after years of eyeing the food business warily, the company is now "just ecstatic" about its supercenter concept, Ulrich said. SuperTarget will boost its square footage this year by 40 percent, adding 30 units on top of its existing 62 stores. "It's a significant part of our growth strategy," Ulrich said, adding that he expects to have 400 supercenters by 2010.

The company has no plans on the agenda to grow through acquisition or international expansion, he said. Domestically, he believes Target has the potential to "at least double our store count" from its current base of approximately 1,080 units.

As is routinely the case, Ulrich reiterated the company's dedication to preserving its mid-tier and department store operations.

"They give us scale and synergies that we wouldn't have without them."

The Marshall Field's department store division has been working to better balance its mix of good, better and best and working on "layering in" opening price points, said division president Linda Ahlers. "We've seen good success with this approach in textiles, especially where we layered back in some opening price points," she said. "It is a very, very promotional environment right now, and we're responding to that."

During the meeting Ulrich was asked by a shareholder how well Mervyn's is prepared to weather the entry of Kohl's into California in 2003. Ulrich said Mervyn's has been working hard to freshen its assortment and sharpen its merchandising. "We do certainly study Kohl's, which is outstanding and successful, the same way we study Wal-Mart."

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