Target Corp. chairman and ceo Bob Ulrich told shareholders yesterday that the Minneapolis-based retail organization has no plans to sell its Marshall Field's or Mervyn's divisions.
“We continue to be fully committed to both Mervyn's and Marshall Field's,” Ulrich told shareholders attending the company's annual meeting. “We believe their combined contribution remains important to our overall strategy.”
Ulrich was responding to a report floated a couple of weeks ago in Crain's Chicago Business that Target was looking for buyers for its department store division as that retail sector goes through much-publicized problems. Mervyn's, the company's California-based mid-price chain, has also been struggling.
Linda Ahlers, president of the department store division, said she feels good about the progress being made at Marshall Field's, which reported a 36 percent increase in pretax profits, though sales dipped 0.7 percent. She attributed much of the progress to better inventory management and an increase of more lower priced items in the department stores, “reinforcing some of the opening price points … that we had abandoned.”
Ulrich did acknowledge that competition within the Mervyn's sector, especially with Kohl's (Menomonee Falls, Wis.), has been challenging. “We certainly do study Kohl's” and would like to do better against such a prime competitor, Ulrich said. Earlier this month, Kohl's reported a 42 percent jump in first-quarter earnings on a sales increase of nearly 26 percent. The retailer announced plans to open 18 more of its retail department stores through 2003, including first-time outlets in the Los Angeles, Phoenix and Las Vegas areas. Pretax profits at Target's Mervyn's division, in contrast, were up just 8 percent and sales slipped 0.9 percent.
Ulrich said Target is preparing for Kohl's “invasion” of California by upgrading the Mervyn's stores. Mervyn's has not announced any plans to open new stores this year.
The strong Target Stores business continues to shine, shareholders were assured. Target intends to open 30 or more SuperTarget megastores annually for a total of 400 by the end of the decade. Target now has 75 SuperTargets, which average 175,000 square feet, sell a wider line of groceries and may also include banks, pharmacies and Starbucks coffee shops.
Ulrich said branding has been important to the success of Target's flagship discount stores, which he said have become “a cool place to shop.” He said the red bulls-eye branding campaign has helped Target hold on to younger shoppers who had previously shifted their dollars to department stores as they headed to college.