By  on May 26, 1994

MINNEAPOLIS -- Women's spring apparel business in Dayton Hudson's department stores has shown slight improvement, Stephen E. Watson, chairman and chief executive of the department store division said Wednesday, following the annual stockholder meeting.

Watson said he looks forward to a positive fall. Swimwear, moderate-priced sportswear and better women's separates currently are good movers, he said.

The meeting -- at Children's Theater here before about 500 people -- was the first since Robert J. Ulrich was named corporate chief executive.

A traditional post-meeting press conference was canceled, and company officials mostly were unavailable for questions.

Ulrich told shareholders that the company's troubled Mervyn's division would be his "priority" in getting Dayton Hudson's earnings back on track. Last year, as reported, earnings declined 2 percent.

"The Mervyn's concept is solid, their real estate is good, and I believe very much in the new Mervyn's team," Ulrich said. " Our challenge is to consistently execute and then to accelerate Mervyn's growth."

The division is expected to open 10 stores this year. Mervyn's operates 276 moderate-price stores in 15 states.

At yearend, Mervyn's inventory level was said to be down about 35 percent year-earlier levels. Shareholders were told that Mervyn's reintroduced women's dresses in 1993, a move that generated more than $90 million in volume for the year.

Ulrich reiterated that Target is the firm's "most powerful growth strategy." With 567 stores in 33 states, the discount store division is increasing in size by more than 10 percent a year. With 60 new stores this year, it will continue to "densify" existing markets in the Southwest, Midwest and Southeast, building market share in those regions, the chief executive said.

Ulrich said the Department Store Division "also has a strong role to play."

"It can provide the opportunity for significant profit and some additional growth," he said. "The key is having the right trend merchandise, terrific prices and providing great service to our guests."

Shareholders were told the company is looking at new and emerging formats, including supercenters -- stores with general merchandise and food. Three such stores will be opened next year, one each in Omaha, Neb., and Lawrence, Kan. The third site is not yet known.Ulrich said the company has looked extensively at other concepts, including international markets, electronic retailing and interactive technology.

"The question is not if we will get into these areas -- at least on a test basis -- but when we will be there," he said.

Kenneth A. Macke, who will retire as Dayton Hudson's chairman on July 1, got a standing ovation from shareholders for his 33 years of service to the company.

He was confronted by one shareholder, though, who complained that as a recent retiree from a Hudson store, she was getting $57 a month while "you will be getting $50,000 a month." Asked whether his pension is hard to justify, he replied, "No -- it is commensurate with policy."

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