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Report: Target to Build Bigger, Greener Stores

BY CSA STAFF

New York City Target Stores will launch two store prototypes this year that are larger than existing Target stores, are green certified and add more space for food and electronics, according to the Minneapolis/St. Paul Business Journal. Target plans to roll out the new prototypes at more than 100 locations nationwide next year, starting in March.

The retailer will test its new general-merchandise store—which it calls P2009—in Waconia, Minn., and its new SuperTarget store —S2009— in Otsego, Minn., the newspaper reported. Both are scheduled to open in October. (SuperTarget stores include full-service groceries; the general-merchandise stores do not.)

Both store models were developed as part of the U.S. Green Building Council’s (USGBC) new Portfolio certification. The pilot program allows prototypes, as opposed to individual stores, to be certified under Leadership in Energy and Environmental Design (LEED).

The new general-merchandise stores will span 132,400 sq. ft., roughly 6,000 sq. ft. larger than the current model. The new SuperTarget stores will be 186,000 sq. ft., about 12,000 sq. ft. larger than existing locations and pushing closer to the average size of Wal-Mart Supercenters.

A key component of both of the prototypes is more floor space for food, especially Target’s house brands, Archer Farms and Market Pantry. The new SuperTarget stores also will have more space for pre-prepared food items at the front of the store.

In other changes, Target’s pharmacies will be more front and center in the new stores whose facades will feature brick and stone instead of the retailer’s standard painted concrete block.

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Wal-Mart misses January sales mark

BY CSA STAFF

The surprisingly weak January sales results Wal-Mart reported Thursday can be viewed as disturbing on a number of levels. For starters, the performance of Wal-Mart’s U.S. stores division, more so than any other retailer, is closely watched as a national economic indicator because it provides broad-based insight into the health of the consumer. As such, it is unsettling that Wal-Mart’s U.S. stores eked out a 0.2% same-store sales increase when the company was expecting a 2% increase for the reporting period ended Feb. 1.

Equally disturbing is what the missed same-store sales estimate says about the pace at which consumers curtailed spending during January. Wal-Mart provided its January same-store sales guidance on Jan. 10, when it announced December 2007 same-store sales that were surprisingly strong at 2.6%. At the time, Wal-Mart already knew what its sales were for nearly one-third of the month when cfo Tom Schoewe said, “During the first two months of the quarter, our comparable-store sales number for U.S. operations has run at about 2%. We expect to run at a similar rate for the January four-week sales period.”

Apparently, sales decelerated rapidly from Jan. 10 through Feb. 1, when the four-week January reporting period ended. The company cited the familiar culprit of unfavorable weather conditions, especially in the Midwest, as contributing to the weakness, and also indicated that gift card redemptions took place at a slower rate during January. It also noted that consumers turned defensive in their purchasing behavior with more gift cards being used to pay for food and consumables purchases rather than more discretionary big-ticket items.

Another possibility for January sales could relate to a reliance on flawed assumptions, certainly with regard to the U.S. consumer, but also as it relates to the effectiveness of merchandising and marketing initiatives. Customer-facing efforts, whether at Wal-Mart or any other retailer, typically gain traction at a slower pace than anticipated by senior management

Despite coming up short against a monthly same-store sales target, it’s worth mentioning that earnings per share guidance for the fourth quarter were unchanged at 99 cents to $1.03.

“Our inventory position remains very good across the country, which has resulted in fewer sales from clearance items than the same period last year,” said Eduardo Castro-Wright, president and ceo of the retailer’s U.S. stores division.

The company will report results for the fourth quarter and full year ended Jan. 31 on Feb. 19, and when it does, sales are expected to increase more than 8% to roughly $375 billion and profits should hit record levels with full-year net income expected to exceed $12.5 billion.

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Wal-Mart U.S. misses comps mark

BY CSA STAFF

BENTONVILLE, Ark. Wal-Mart’s U.S. January same-store sales rose by 0.5%, less than the 2% forecasted by the company and analysts.

The retailer said that sales of nonessential items like home goods, apparel and jewelry struggled, although groceries and health care items did well.  

Wal-Mart placed the blame for the disappointing numbers on unfavorable weather, particularly in the Midwest, and on gift card redemptions that fell below expectations. The company said that customers were holding on to the cards and often using them for food and consumable goods rather than splurging on nonessential items.

Same-store sales rose 0.2% at namesake stores and 2.1% at Sam’s Club locations, which operate gas stations. Including gas prices, same-store sales rose 4.9%. Net sales for the month ended Feb. 1 rose almost 8% to $27.28 billion.

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