NEW YORK — Target Corp. sees plenty of opportunities for growth right here at home.
The Minneapolis-based retailer with 1,107 Target doors is aiming for 2,010 locations under the Target nameplate by the year 2010, according to Douglas Scovanner, chief financial officer and executive vice president. He spoke Friday at the Goldman Sachs Global Retailing conference at the Plaza here.
Regions ripe for expansion include New York and the Carolinas. The firm already has a strong presence in markets such as California, Texas and Florida.
With its success domestically, Scovanner asserted, Target has “no interest whatsoever in pursuing an international retail channel.”
Over the next few years, the company plans on investing $3.3 billion to $3.5 billion, annually, 70 percent of which will go to new stores and remodeling. For 2002, Target is set to open 114 stores and close or relocate an additional 20 locations, making for growth of about 12 percent in square footage.
Further expansion will put Target toe-to-toe with Wal-Mart Stores in more markets. The world’s largest company has a head start, though, with 1,603 discount doors and 1,179 Supercenters in the U.S.
Bentonville, Ark.-based Wal-Mart was a recurring theme for Scovanner. While both Kohl’s Corp. and Wal-Mart have managed better returns to their shareholders over the last five years, he said he’s working on changing that. The cfo also noted of Wal-Mart, to the amusement of those in attendance, “Unfortunately, I think they too have a bright future.”
Scovanner described Wal-Mart as “a very effective cloning machine” that picks and chooses successful strategies from other retailers. “Each and every year, Wal-Mart gets better and better at apparel,” forcing Target to stay on its toes to keep ahead, said Scovanner.
As reported, Wal-Mart’s been rolling out its British-born trend-right George apparel line. Target’s made efforts to be more on the cutting edge in apparel, especially in its exclusive Mossimo offerings.
Target, along with the rest of the retailing industry, just endured a difficult August, when its comparable-store sales slid 0.1 percent overall, and managed to inch up only 0.5 percent at its discount stores.
“August sales were not good,” admitted Scovanner. “They were very poor in fact.” The sales environment, though, has been shifting recently, and he noted, “We’re not sages. We’re not going to be able to tell you when that’s going to turn again.”
However, he said, Target is on track to meet earnings estimates of 31 cents a share in the third quarter. That number could be at risk by 1 or 2 cents if sales remain weak. “If we were to miss the third quarter by a penny or two, I think we have that kind of upside in the fourth quarter,” allowing it to meet its earnings-per-share estimate of $1.83 for the year, said Scovanner.