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Target’s Latest Mantra: Apparel Is OK, But Food’s Even Better

Target Corp. is cutting back on space for apparel, hoping to drive more traffic into its discount stores with additional food offerings.

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NEW YORK — Target’s discount stores are finding food more fashionable than apparel.

On Thursday, Target Corp. said it’s cutting back on space for apparel, hoping to drive more traffic into its discount stores with additional food offerings. The retailer also is strengthening its emphasis on low pricing and communicating that value to its customers through circulars and advertising.

Those revelations came on a conference call reporting the first-quarter results of the Minneapolis-based retailer, which were basically on par with a year ago on the bottom line, and relatively sluggish on the top line with a 7.6 percent rise.

Investors reacted by trading shares of the firm down $1.47, or 4.1 percent, to $34.46 on the New York Stock Exchange Thursday.

“As we continue to emphasize price on some branded consumables, that business has been stronger than our home business or our apparel business,” said Gregg Steinhafel, president of the Target division.

Changes in space allocation will not be across the chain. New and remodeled stores from the fall season forward reflect the revamped layouts. Fewer than 100 Target discount stores also will be made to fit the new mold.

For food, more space will be added to the beverage, dry grocery, dairy and frozen categories. Apparel, especially men’s, will be downsized in addition to the automotive, home improvement and sporting goods areas.

As reported, food is a critical part of Target’s growth strategy, but has yielded mixed results in its performance thus far. The SuperTarget concept, which incorporates perishable as well as packaged and frozen foods, has received a lukewarm reception from Wall Street analysts so far.

“Men’s has been an underperforming category nationally for some time and we’re adjusting space to be reflective of what we believe the outlook to be in the future, which is again a softer-than-average growth,” said Steinhafel.

Women’s ready-to-wear actually will expand slightly with more space in the maternity area and a concomitant increase in infant and toddler space. Kids will slightly deemphasize boys’ in favor of girls’ apparel.

“We’re not walking away from any of the businesses that you see in the stores today,” Steinhafel assured analysts on the call. “The dynamics are changing quite a bit overall in the apparel side of the store and, in total, it’s coming down just slightly, but we’re making some shifts and some trades to more accurately reflect what we believe the business potential to be in the future.”
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