Photography group names Sony exec board advisor
Mike Kahn, director of Alpha Camera Systems for Sony Electronics was named special advisor to the board of PMA, the Worldwide Community of Imaging Associations.
The move is long overdue for an 86 year old organization focused on serving the needs of the imaging industry as Kahn’s appointment marks the first time a manufacturer representative was named to a PMA executive committee.
In his new role, the 16 year Sony veteran will take part in bi-monthly calls and face-to-face meetings with the PMA executive committee to represent photo and imaging manufacturers, according to PMA.
"Appointing Mike to this role is another way PMA is fulfilling its new mission statement, which is to promote the growth of the imaging industry," said PMA president Allen Showalter. "PMA is actively seeking new avenues to provide the support and opportunities needed to help the imaging industry thrive and grow now, and in the future. The voices of photo and imaging manufacturers are critically important to achieving this goal and PMA is listening to them. We are excited to be working with Mike to make a direct connection between the PMA board and photo manufacturers."
In addition to his role at Sony, Kahn is vp of the Photoimaging Manufacturers and Distributors Association (PDMA) and serves on the board of the Consumer Electronics Association’s (CEA) Digital Imaging Group.
As director of the Alpha Camera Systems division at Sony, Kahn is responsible for all aspects of the business unit, including sales, marketing, and product development for the U.S. marketplace.
"I am thrilled to join the PMA Board and supply a needed point of view from the photo and imaging manufacturers," Kahn said. "I am looking forward to helping the PMA board expand imaging sales across all channels."
CityTarget love amid modest 2Q growth
Target’s second quarter sales increased 3.5% to $16.5 billion and the company’s profits grew 2.9% to $1.06, five cents better than analysts expected.
The company’s second quarter results were negatively affected by pre-opening expenses related to next year’s entry into Canada. Excluding those expenses, Target said its profits would have increased 4.6% to $1.12 compared to $1.07 last year. Including expenses related to Canada, Target increased its full year profit forecast to a range of $4.20 to $4.40 from an earlier guidance range of $4.10 to $4.30.
"We’re pleased with Target’s strong second quarter financial performance, which reflects a continued focus on delivering an outstanding experience for our guests and disciplined execution of our strategy," said Gregg Steinhafel, Target’s chairman, president and CEO. "In addition, we’re very pleased with the initial response to the July opening of our first three CityTarget locations in Seattle, Los Angeles and Chicago. We look forward to serving guests in these dense urban areas with an exciting store format and uniquely-tailored assortment."
Expectations are high that City Target could provide a boost to growth in the coming years in addition to further benefits from the PFresh remodeling initiative, increased penetration the 5% Rewards program and entry into Canada. When asked about the potential for CityTarget during a second quarter conference call, Steinhafel said it is too early to tell as the first units had only been open a month. It could be 75 stores or several hundred, he said.
The company also is looking forward to opening its first stores in Canada early next year and incurring considerable expense in advance of the openings. Thus, Target has taken to reporting two sets of financials results, one set that includes expenses related to the Canadian entry and another that breaks out those costs to present investors with clearer view of the performance of the U.S. business.
In the case of the latter, investors seem to like what they see and have propelled shares of Target to a 52-week high, despite relatively modest top line growth and declining margins. Operating profits at Target’s U.S. retail segment advanced 2.9% to slightly more than $1.1 billion in the second quarter and gross margins declined to 31.3% from 31.6%. The company said the decline reflected, "the impact of the company’s integrated growth strategies partially offset by underlying rate improvements within categories."
To offset the gross margin decline the company has maintained tight control of expenses within its U.S. operations and as a percent of sales expenses are now 21.1% compared to last year’s 21.3%.
Convenience and value on menu for Q3
Shoppers are hungry for convenience and value and Target continues to deliver both.
The fact that more customers are shopping Target more often has everything to do with decisions put in place several years ago to dramatically expand food and consumables and implement a loyalty program that rewards shoppers with 5% savings. The combination of those two strategies – along with consistent execution of the company’s differentiate merchandise offering – has yielded 11 consecutive quarters of positive same store sales growth with a 3% comp increase expected during the third quarter.
"We are now in the third year of our remodel program, and approaching the two-year mark since the nationwide launch of 5% Rewards," Target chairman, president and CEO Gregg Steinhafel said during the company’s second quarter earnings call. "We have driven billions of dollars of incremental sales while maintaining our retail profit margins. And, just as importantly, as a result of these programs our store base is fresher and more relevant than ever, and our guests have developed a deeper loyalty to Target."
The significance of loyalty is impossible to overstate. When economic conditions are more favorable and cash is sloshing about the marketplace even marginal retailers appear to have loyal customers. True loyalty doesn’t become apparent until consumers become more discriminating about where they choose to shop and how much they spend, as has been the case now for several years. That’s why Target’s differentiated brand, shopper frequency initiatives and growing loyalty program are enabling it to prosper as others flounder outright or struggle to grow.
Meanwhile, Target is confident of more participation upside in its 5% Rewards program. The nationwide penetration rate is now at 12.8% a little less than two years after it was launched. However, in the Kansas City test market where testing began a year before the national rollout the penetration rate is expected to reach 20% next year and CFO John Mulligan believes the company could see a similar level achieved nationally in the coming years.
"Given that the nationwide rollout has closely followed our experience in Kansas City, continued growth in that market provides all of us a clear road map for where nationwide penetration will likely be a year from now," Mulligan said.