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Target increases dividend by 19.4%

BY Mike Troy

Minneapolis — The Target board of directors demonstrated confidence in the company’s cash generating capabilities on Wednesday and agreed to up the company’s quarterly dividend 19% to 43 cents a share.

The hefty increase ups the annual payout to $1.72 and moves the company closer to a long-term commitment to increase the full-year dividend amount to $3 by 2017. In addition, the company has established a target of growing earnings per share to $8 over the same time frame, up from $4.26 last year.

The dividend increase was announced in advance of the company’s shareholders’ meeting held Wednesday at a Target store located at 7777 East Hampden Avenue in Denver.

Target chairman, president and CEO Gregg Steinhafel said the company’s strategic clarity and powerful brand would help it deliver results going forward and the REDcard Rewards program, which currently stands at a 17.1% penetration rate, would allow the company to promote loyalty.

Steinhafel added that the company would take smart risks, pursue bold and innovative ideas and continue to raise the bar on differentiation.

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Five B gets a new DC and comp boost

BY CSA STAFF

A 4.2% first quarter same store sales increase at teen retailer Five Below and better than expected results prompted the operator of 258 stores to increase its full year guidance.

Sales for the quarter ended May 4 increase 33.1% to $95.6 million and operating income swung to $3.2 million from a prior year loss of $2 million. Net income was $1.6 million compared to a net loss of $1.2 million the prior year.

The company opened 14 new stores and said it is on track to open a total of 60 units, including 15 stores in the new markets of Dallas and Austin. To support those locations and anticipated growth in other southern states the company began operations at a new distribution facility near Memphis during May.

"The first quarter played out largely as we had expected and we are pleased to have delivered results that came in ahead of our original guidance,” said Thomas Vellios, co-founder, president and CEO of Five Below. “As we said a few weeks ago, once the headwinds facing consumers abated mid-quarter, we saw a strengthening in our traffic and sales patterns as our trend-right merchandise at extremely compelling prices resonated with our customers."

The company expects continued improvement in the second quarter with a comp increase between 4% and 5% sales totaling between $112 million to $114 million. Full year sales are forecast to total $524 million to $529 million, assuming comps increase 4% and 60 stores open as planned.

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A.T. Kearney: Brazil tops among developing countries for retail investment

BY Marianne Wilson

Chicago — For the third consecutive year, Brazil ranked number one in the top 30 developing countries for retail investment worldwide by A.T. Kearney. Rounding out the top five are: Chile, Uruguay, China and the United Arab Emirates.

The 2013 A.T. Kearney Global Retail Development Index (GRDI) revealed that South and Latin America remain significant growth markets for retailers. Sub-Saharan Africa continues to build momentum, with Botswana and Namibia in the rankings and a few other nations ranked just outside the top 30. Africa is a dramatic retail opportunity if business and political risk can be managed, according to the survey.

A number of small countries with unique characteristics of wealth and consumer focus including Uruguay (3rd) Mongolia (7th), Georgia (8th), and Armenia (10th) are ranked in the GRDI. For luxury retailers, these are new-found hubs. For general retailers, these countries can be the beginning of a regional strategy.

“Shopping centers and malls are driving much of the progress in organized retail in developing countries, as they solve regulatory and real estate issues for many retailers, “ said Althea Peng, A.T. Kearney partner and study co-leader.

In other survey findings, India dropped nine places in the ranking, landing at number 14. The global slowdown did not spare India, whose GDP growth rate slipped to 5% to 6%, while same-store sales volume growth slowed in 2012 across all retail segments. High operating costs, low bargaining power with vendors, and a need to discount heavily to improve sales have put pressure on margins and, therefore, retailers’ expansion plans. Real estate cost and space availability have been important issues as well.

The top 10 countries

  1. Brazil
  2. Chile
  3. Uruguay
  4. China
  5. United Arab Emirates
  6. Turkey
  7. Mongolia
  8. Georgia
  9. Kuwait
  10. Armenia

Published since 2002, the GRDI ranks the top 30 developing countries for retail investment worldwide. The Index analyzes 25 macroeconomic and retail-specific variables to help retailers devise successful global strategies and to identify emerging market investment opportunities.

To read the full 2012 GRDI Report, visit grdi.atkearney.com.

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