MINNEAPOLIS — Target ended last year with sales of $67.4 billion and earnings per share of $4, but if company chairman, president and CEO Gregg Steinhafel has his way, within six or seven years earnings per share will double to $8 and sales will top $100 billion.
Steinhafel provided a brief overview of the strategies in place to achieve those targets at the company’s annual meeting Wednesday afternoon held inside a soon-to-open Target stores in downtown Pittsburgh. The location was a fitting venue since the store is the company’s first within the city limits, and a key element of Target’s growth plan involves penetrating urban markets with new small format stores. The first of these stores, dubbed CityTarget, are scheduled to open next year in Los Angeles, San Francisco, Chicago and Seattle.
Other elements of the growth plan detailed by Steinhafel during the one-hour meeting included a continuation of an ambitious store-remodeling program known as PFresh, expansion into Canada, further penetration of the 5% REDcard Rewards program launched last fall and the upcoming relaunch of Target.com this fall with an emphasis on mobile integration.
“As we progress through this recovery, we continue to focus on what matters most to our guests; a highly competitive value proposition, an unbeatable combination of national and owned brands, a continuous pipeline of new merchandise that surprises and delights and a consistently superior shopping experience, both in our stores and on line,” Steinhafel said. “This differentiated combination delivered with disciplined execution on in-stocks and thoughtful expense control is s key to profitable market share growth and sustaining our strong results.”
Most recently, the key driver of those results has been the rollout of the PFresh format, which involves adding fresh food to the company’s traditional discount stores, expanding the offering of consumables and upgrading product assortments and presentations in such key departments as electronics, shoes and housewares. Target remodeled 341 stores last year and now has 462 stores in the PFresh format with another 350 units due to be remodeled this year.
In addition to those remodels, Target added its new rewards program in October, which offers shoppers a 5% discount and according to Steinhafel, enables the company to deepen its relationship with its best customers. In a similar vein, Steinhafel said the company will achieve a much deeper level of customer engagement when its e-commerce site relaunches later this year along with some industry leading mobile applications.
The investments in technology, coupled with physical improvements in the form of remodeling activity and new market entries in urban areas and Canada did little to impress shareholders who attended the meeting. When Steinhafel opened the meeting to questions from shareholders not a single question was asked about the effectiveness of the strategies, challenges associated with the Canadian expansion or the financial impact of the 5% rewards program.
What shareholders who attended the meeting cared the most about was needling Steinhafel about a political donation the company made eight months ago to a candidate opposed by gay rights activists. After fielding several questions on the topic and thoroughly explaining the company’s revised approach to future political donations, Steinhafel began directing subsequent questioners to the company’s website where an abundance of information resides. Although the topic is a serious one, the repeated questioning became comical as Steinhafel noted, “Qe have exhausted this topic. Does anyone have questions about the business?” That appeal was met again with subsequent questions on the political donation topic with questioners all coming at the subject from a slightly different angle.
Eventually, one long-time shareholder rose to comment on the fine work done by Target’s front line store employees. Since the meeting was being held in a store that is due to open next month, the shareholder asked that the employees be recognized, and Steinhafel obliged.