Target Corp. said on Wednesday it expects to increase its presence by 25 percent over the next five years to about 2,000 stores in the U.S., and will open its first outlets in Alaska and Hawaii.
Target Chairman and Chief Executive Robert Ulrich said in a presentation to analysts that the company remains focused on adding U.S. stores. The company has shown relatively little interest in adding stores in Canada or other locations outside the U.S. That’s in contrast to retailers such as Best Buy Co. Inc., which has a fast-growing Canadian operation and is expanding into China, and Wal-Mart Stores Inc., which has nearly a third of its 6,700 stores outside the U.S.
Target currently has 1,502 stores and said it plans to add about 100 stores per year through 2011.
Ulrich said Target might be interested in buying a large block of Canadian stores if they came on the market, but in the meantime it has lots of room for growth in the U.S. and will focus on that for the time being. He said he believes there’s room in the U.S. for at least 3,000 Target stores — although he acknowledged that Chief Financial Officer Doug Scovanner thinks the number is closer to 2,500.
“We’ve got a minimum of 10 years of growth at the current pace and many many more stores,” Ulrich said.
He said it’s not clear that there are any big advantages to being first in many overseas markets, although he said eventually Target would add stores outside the U.S.
“In some of the major emerging economies such as India and China one could argue that it’s much better to enter 5 years or 10 years down the road when that guest is becoming more affluent, better educated, because that is more in sync with our strategy,” he said.
The increasing food sales at both SuperTarget grocery stores and regular Targets have worried some observers because food is generally less profitable than other goods such as furniture and clothes. But Scovanner said those items drive customers into the stores and gives Target a chance to sell them more highly profitable items.
Like other retailers, Target has been adding flat-panel televisions. President Gregg W. Steinhafel said Target will offer screen sizes up to 42 inches and prices as high as around $2,500 this year. He said flat-panel TVs will soon make up almost 90 percent of Target TV offerings.
The nation’s second-largest discount retailer repeated its February guidance of around $3.60 in earnings per share for the current year.
Also Wednesday, Target said its sales at established stores grew 12 percent in March, helped by the earlier Easter holiday. Results were in line with Target’s expectations for 11 percent to 13 percent growth.
Same-store sales, or sales at stores open at least a year, are a key measure of a retailer’s performance, because they measure growth at existing stores rather than from newly opened locations.
Total sales for the five-week period ended April 7 grew 16.8 percent to $5.59 billion, from $4.79 billion a year ago. For the combined March/April period, the company expects same-store sales will be up 4 percent to 6 percent.
Year-to-date, same-store sales are up 9.2 percent, compared with 2.8 percent a year ago. Revenue has grown 14 percent to $9.72 billion.
Wal-Mart Stores Inc. and other major retailers are expected to report their final March results Thursday.
The International Council of Shopping Centers said Tuesday it still expects same-store sales to rise anywhere from 4 percent to 5 percent in March, following a modest 2.5 percent gain in February.