STORE SPACES

Target’s Q2 Earnings Call: Six Interesting Facts

BY Marianne Wilson

Target's remodeling efforts, new smaller store format, same-day delivery pilot and private-label brands were among the topics discussed by company executives during the chain's quarterly earnings call on Wednesday with investors and analysts. Here are six interesting points from the call worth noting:

1. Target's ambitious remodeling effort, which calls for the transformation of the look and feel of more than 600 stores over a three-year period, is paying off. While the retailer said it sees a range of outcomes on an individual store level, average sales lifts are in line with its plan to deliver a 2% to 4% sales lift in remodeled stores.

2. The pace of store remodels will pick up in 2018. The company is on track to complete more than 100 remodels this year, with 63 completed to date.

3. Target will open nearly 30 small-format stores this year, with a total of more than 100 planned over the next three years. In July, it opened nine new small stores on top of four in the first quarter. The July openers have been particularly strong out of the gate, company executives said.

Sales productivity in the seven small format Target stores that have been open for more than a year is more than double the company average, and the stores have been delivering high single-digit comp increases so far in 2017.

4. The company is experiencing rapid growth in its capability to ship digital orders from stores directly to customers' homes. In the fall, it plans to roll out the program to another 350 stores in advance of the holiday season, bringing the total number of ship from store locations to more than 1,400 stores.

5. Target's efforts to differentiate its assortment with exclusive brands are resonating with customers. Its Cat & Jack kids' apparel brand has exceeded expectations and crossed the $2 billion mark only slightly more than a year after its launch. Infant brand Cloud Island has generated double digit comp increases since its launch in May.

Based on the success of these and other private brands, Target will, as previously announced, launch 12 new brands by the end of 2018, including several this fall.

6. The value of the average basket for same day-delivery orders, which is currently being tested in Target's Tribeca store in downtown Manhattan, is more than six times the store average at the store and contains nearly four times the units compared with the store's typical basket. Home is the most common category, ahead of essentials, food and beverage. The company plans to expand the same day delivery test to several other New York City locations in the fall.

BONUS: Target is REALLY excited about the upcoming Star Wars release ("Stars Wars: The Last Jedi" opens Dec. 15.) It will launch its latest Star Wars assortments on Sept. 1, which it has dubbed Force Friday. To celebrate, 500 Target stores across the country will open at midnight.

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STORE SPACES

TJX to open 260 stores this year

BY Ernie Herrman

Off-price powerhouse TJX Companies still seems plenty of room for store expansion — particularly in the home good sector.

The retailer, which reported strong second quarter results on Tuesday, has more than 3,800 stores worldwide and will open 260 new locations this year. Long term, it sees the opportunity for 5,600 stores with it current banners, or about 1,700 more locations than it currently operates.

"We see enormous global store growth potential for TJX," CEO Ernie Herrman said on the company's quarterly call with investors and analysts. "We have plenty of white space or markets to fill in throughout our current countries. We continue to see store openings as an attractive investment and a very good use of capital internationally."

TJX's remains committed to its brick-and-mortar strategy. More importantly, so do its customers.

"The customer is clearly telling us that brick-and-mortar retail continues to be an essential part of the shopping experience and certainly when it is executed right with the right values," Herrman said. "All of this gives us confidence in our long-term global store growth potential. Our key pillars for growth remain driving comp sales and customer traffic and our global store expansion."

On the call, Hermann also discussed TJX's new U.S. home concept, HomeSense, which debuts Aug. 17 in Framingham, Mass. He emphasized that HomeSense will look and feel very different from the company's HomeGoods chain.

"HomeSense is rooted in inspiration and discovery and will complement HomeGoods by offering expanding categories such as large scale furniture lighting and art," Herrman said.

The new format will also include such new departments as a general store, which will offer organization and hardware items, with an element of fashion. Certain departments, including kids and pets, will be featured only at HomeGoods.

“We believe an enormous opportunity remains for us to gain additional share in the U.S. home market,” Herrman said. “We are confident that shoppers are going to love our new HomeSense stores.”

While HomeGoods is typically a standalone format, TJX is experimenting. It has "successfully" opened more than 20 HomeGoods stores co-joined with an existing larger Marshalls or T.J. Maxx store. Pleased with the above-plan sales of this group of stores, the retailer plans to convert an additional 10 Marmaxx (Marshalls or T.J. Maxx) locations to this format this year.

“This initiative will bring even more HomeGoods stores to new markets more quickly and efficiently and increase our overall HomeGoods openings to almost 100 this year,” Hermann said. “Again, we are seeing great opportunity for the future of our company within the U.S. home sector.”

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Saks Fifth Avenue to roll out new salon concept — with augmented reality

BY Marianne Wilson

Saks Fifth Avenue is debuting a new salon concept with a futuristic edge.

The luxury department store retailer is partnering with Joel Warren, co-founder of the Warren-Tricomi hair salon chain, on the Salon Project, which will offer hair care, skin care and beauty services along with a medical spa and retail. The concept will launch this fall at Saks' store in Huntington, New York, with additional locations at Saks' stores in Houston and Boca Raton, Fla., opening by 2018. The concept will open in Saks' New York City flagship in fall 2019. In all, the concept will be rolled out in in 10 U.S. Saks stores during the next two years.

Designed by New York City-based design and build firm RPG, the salons will range in size between 3,000 sq. ft. to 5,000 sq. ft., with an environment described as "20th-century retro meets modern classical glamour." The space, which includes many contemporary twists, will not have the typical salon front desk to check in clients. Instead, customers will check in with concierges equipped with iPads which will direct them to their designated station.

The stations are designed with sink, services and retail together so that the customer can remain there for the duration of their services. At their seats, clients can use augmented reality technology to try on products available in the salon's inventory and test lipsticks from a try-on bar cart, all while receiving recommendations from their hairdresser who can complete product purchase transactions from an iPad.

"This is the salon of the future by combining stores like Apple, Sephora and a high-end salon and spa," said Warren. "As soon as guests walk in, they will literally enter a virtual reality. Screens will be set up right at the entrance, which will allow clients the ability to virtually try on lipsticks and other cosmetics, then purchase products or add on services on the spot."

Warren, who left Warren-Tricomi in 2016, is creating his own makeup line and hopes the salon will be a “brand incubator” and showcase for curated, independent retail lines, reported the New York Post.

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