• Andrea Lillo

Retailer to expand store base in '02

Minneapolis — Pleased with its third quarter performance, Target executives outlined several initiatives for next year, including store-base expansion, the Target and Amazon alliance, and updates on supply chain and in-stock strategies.

Inventories at all three divisions are in good condition — at 10.7 percent more than last year, primarily reflecting square footage growth at Target Stores, said Doug Scovanner, executive vp and cfo, during a conference call.

Target just completed its remaining store openings for the year, for a total of 1,055 stores in 47 states, an increase of 11 percent of store base footage this year. In 2002, the discounter plans to open the 35 former Wards stores, as well as 75 to 85 additional stores, for a store-base growth of 12 percent. Beyond 2002, however, annual store base growth will return to 8 percent to 10 percent increases.

Several weeks ago, Target launched its Target Store on Amazon.com, and Gerry Storch, vice chairman, called the partnership "a breakthrough for guests and Internet shopping [that] creates a strong competitive advantage for Target." Its initial edited selection of Target merchandise will be expanded next year to a more comprehensive merchandise selection.

Target will relaunch an upgraded Target.com next summer, and it will combine the entire assortment of target.com, marshallfields.com and giftcatalog.com, as well as Amazon's complete assortment of books, music and videos. Though Mervyn's will have a few items on the upgraded site, it will not be a focus.

The rollout of Target and Visa's Smart card began this quarter, and Target is pleased with its debut.

Meanwhile, Target's supply chain and in-stock initiatives have had "tangible and positive results," he said. Target currently has the highest in-stock in history on its top 1,000 items, and among one of the highest for the rest of the assortment, due in part to such programs as keeping stock closer to stores in the DCs and highlighting product with special stickers for the shelves.

Target also opened its first import warehouse this year, as well as a pre-DC.

Along with strong trends in toys and electronics so far this holiday season, the home categories were also strong, said Gregg Steinhafel, president, Target Stores. Mervyn's is also looking to improve, as it continues to maximize "up-trending" areas such as decorative home, said Diane Neal, president, Mervyn's, and downsize underperforming areas.

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