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Target talks transformation

Home department revamp rolling out this year

Philadelphia – Target executives spent the day here with retail analysts, walking them through the company’s new P Fresh format and outlining a renovation of the store base that includes an overhaul of the home department.

“We are making changes in every corner of the store,” said Kathee Tesija, executive vp, merchandising. Home, she added, is “key to our brand and our profitability. Three-quarters of our guests think of Target first for home.”

The changes will include lower fixtures, more signage explaining product attributes, improving assortments, better defining the look of each brand and new designer partnerships.

To that end, Tesija ran through a list of short-term designer launches for spring:

Liberty of London in home and apparel, a 9-week program with more than 300 skus launching in March;

Jean Paul Gautier in apparel, a 5-week program beginning in March;

Zac Posen in apparel, a 9-week program beginning in March;Cynthia Vincent in footwear, a 5-week program beginning in April;Eugenia Kim in hats, a 9-week program beginning April.

The P Fresh format, which incorporates produce and other fresh food items into store, will explode the number of food sides from 34 to 55. Tests of the format in the Philadelphia market yielded a 6% to 9% jump in sales, according to Gregg Steinhafel, chairman, president and ceo. Doug Scovanner, evp/cfo, said the changess are expected to boost the gross margin rate at remodeled stores by 18%.

During the question and answer period, executives were asked about product pricing. Tesija acknowledged that Target is being quoted higher fabric prices but said merchandise coming in for early fall is slightly lower in cost. What comes after remains an open question, she added, but she expects to see late fall prices level off.

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