Target Focuses On Expansion And New Initiatives, Raises FY2013 Guidance
Target (NYSE:TGT) recently announced its Q2 2013 results with approximately a 3.5% increase in sales to $16.5 billion compared to the same period last year. This increase was driven by a 3.1% increase in comparable store sales and the contribution from newly opened stores. However, the firm’s net earnings remained flat at $704 million vis-a-vis Q2 2012. The management has raised the EPS guidance and expects adjusted EPS of $4.65 to $4.85 for fiscal 2013. New initiatives and international expansion plans remain at the forefront for the world’s second largest retailer. We have discussed them briefly in this article.
We revised our price estimate for Target from $56 to $63, which is in-line with the market price. We updated Target’s net debt position according to the latest balance sheet numbers. We also adjusted our estimates for the number for stores in Canada, in accordance with the company guidance.
See our complete analysis for Target here
- Shifting Targets: Are These Two Stocks A Better Bet Than TGT?
- Why Did Target Stock Jump 10%?
- With The Stock Almost Flat This Year, Will Q2 Results Drive Target’s Stock Higher?
- Is Amazon Stock A Better Retail Pick Over Target?
- Gaining 12% Year To Date, Will Q1 Results Drive Target’s Stock Higher?
- TGT Stock Up 21% YTD, What’s Next?
Focus on new initiatives
- Target has distinguished itself from other retailers by way of its partnerships and innovative programs. The ‘Back-to-School’ and ‘Back-to-College’ promotional programs have received good customer response. These programs target school and college segments and sell products through innovative ways.
- In September, Target plans to roll out its next installment of The Shops, a new merchandising program. The next installment will focus on home and apparel. Target has partnered with four distinctive boutiques to create exclusive collections for its customers with prices ranging from $3 to $120.
- Target, together with other leading retailers, has formed the Merchant Customer Exchange (MCX), a secure mobile payment solution that will be connected across multiple retail environments. (See our previous post: Wal-Mart, Target Sharpen Focus on Mobile Payments System)
Canadian expansion plans on track
The retailer is leaving no stone unturned to make its first international expansion plan a success and is on track to open 125 stores in 2013. At present, it is focusing on developing technology and supply chain infrastructure for its Canadian operations. It has already started renovations on 7 former Zellers stores, and it plans to begin work on 38 more next quarter.
Focus on online sales
Target, like other brick and mortar retailers, is focusing on driving online sales. It is working on improving the website experience for its customers, and it plans to implement changes related to search, navigation and speed of checkout before the holiday season.