Steinhafel said the financial results affirmed Target’s business strategy and that the discounter was dedicated to maintaining its competitive advantage with exclusive brands, design partnerships and hip marketing.
The other half of the “Expect More, Pay Less,” model, though, is value. Steinhafel said Target remains committed to matching Wal-Mart’s prices in local markets on identical items and would be more aggressive in communicating its value message in its broadcast advertising and weekly circulars.
The chain is in the process of “modestly increasing” its advertising emphasis on items that drive frequency and will time the marketing of selected brands to generate excitement, he said.
Steinhafel pointed out that over the past nine months, SuperTargets have been reducing their dependence on promotional pricing for consumables and perishables while strengthening their everyday pricing posture on the grocery side of the business.
Elsewhere under the corporate umbrella of Target, Mervyn’s first-quarter pretax segment profits sank 53.8 percent to $24 million on a 6.8 percent drop in sales to $804 million. Pretax segment income at Marshall Field’s fell 40.6 percent to $19 million on a 5.6 percent decrease in sales to $590 million.
Target’s credit card operations, results of which are included in the segment profits, on their own contributed pretax profits of $151 million, a 31.3 percent rise. Total credit revenues shot up 31.4 percent to $339 million.