Executives from Hudson’s Bay Co., Wal-Mart Stores Inc. and Target Corp. gathered in New York Wednesday to pitch their growth stories to investors at the Bank of America Merrill Lynch Consumer and Retail Conference.
While none had shareholders jumping for joy — shares of all three companies slipped along with the rest of the market — the presentations highlighted how each company is striking out on a different course toward market-share gains. HBC is looking to roll out more Saks Fifth Avenue Off 5th doors; Wal-Mart is refining its approach to low-income consumers, and Target is trimming costs and courting shoppers on the Web.
Here, a summary of the pictures retailers were painting for Wall Street:
• At Hudson’s Bay Co., the Saks Fifth Avenue Off 5th off-price chain has emerged as the prime vehicle for growing the footprint in the U.S. and Canada.
“We’re moving them onto Main Street,” said Jerry Storch, HBC’s chief executive officer. “We’re accelerating growth of these stores. They’re the only place where we are really going to push.”
Storch said the 79-unit Saks Off 5th is “nowhere near saturation. There is clearly huge opportunity in the value segment….As for outlet malls, I don’t think they’re done. I think outlet malls will continue to grow.”
Storch said Saks Off 5th will expand at a rate of 10 to 15 stores annually in the U.S., and up to 25 are seen in Canada. Shares of Hudson’s Bay slipped 1.5 percent to 27.47 Canadian dollars, or $21.97.
• Wal-Mart’s executive vice president and chief financial officer, Charles Holley, zeroed in on what motivates the retail giant’s lower-income consumer — the price of gas, health care, the cost of living and jobs are perennially top of mind. “They’re consistently the same and aren’t going to change,” Holley said.
Lower gas prices had a big impact on Wal-Mart’s business in the recent fourth quarter. “A lot of our customers live paycheck-to-paycheck,” Holley said. “When gas prices came down, that was like an instant raise for them. They had cash in their wallets.”
Holley called out the apparel and home categories as being particularly strong recently. “We probably went a little too far three or four years ago with some of the fashion apparel we had,” he said. “We’re really good with basics and even activewear. We had negative [comparable-store sales] in apparel for a number of years. I expect us to continue with positive comps. There are a lot of new brands that we’re going to be bringing in.” Shares of Wal-Mart fell 1 percent to $82.58 on Wall Street.
• Target’s executive vice president and chief financial officer John J. Mulligan took the opportunity to expand on the company’s new direction, laid out at an analysts’ meeting on Tuesday. The retailer is trying to become leaner, more efficient and more agile by eliminating thousands of jobs at its Minneapolis headquarters over the next two years, while hiring data and analytics specialists, engineers and technology experts.
Apparel departments in Target stores are getting new fixtures and mannequins. In the fall, 250 stores will have a new home department prototype. “As we implement [these initiatives], we think we’ll start to see traffic build,” Mulligan said. “We’ll see the digital channel continue to grow quickly and we could start to see traffic in stores build.”
Mulligan said when the retailer was at the top of its game, it took lots of little risks, putting things into stores that were a bit different. As Target developed an appetite for bigger risks, such as its foray into Canada, it was too preoccupied to take smaller risks. Now, Target is “taking the handcuffs off the [product development and design] team and letting them design where the trend is going,” Mulligan said. “I think a lot of it is just removing the shackles.” Shares of Target slipped 0.4 percent to $77.72.