Target plans 2,000 U.S. stores by 2011
The chain's Hawaii debut is part of the national expansion
MINNEAPOLIS » Target Corp. said yesterday its planned Hawaii store is part of a chainwide expansion push that will increase its presence by 25 percent over the next five years to about 2,000 stores in the United States, including its first outlet in Alaska.
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. The company has plans to build a 160,000-square-foot store in Kapolei as well as a second location at the former Costco Wholesale Corp. site in Salt Lake. It also has discussed the possibility of other stores on Oahu, the Big Island and Maui.
Besides Hawaii and Alaska, the only other state without a Target outlet is Vermont.
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 United States 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.
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.
Year-to-date, same-store sales, or sales at stores open at least a year, are up 9.2 percent, compared with 2.8 percent a year ago.