Target, like many other retailers, has had a tough go since the economy first hit the skids back in 2007. And while the usually conservative retailer is not ready to go marching around to "Happy Days Are Here Again," the company's CEO is feeling positive about its prospects for the holiday season and beyond.
Gregg Steinhafel, chairman, president and chief executive officer of Target, said in a conference call that the retailer is looking for an increase of between two and four percent in same-store sales for the fourth quarter.
"We've built our holiday season plans to create excitement and provide our guests unbeatable value," said Mr. Steinhafel, in a press release. "In addition, our guests can save more than ever with our new five percent REDcard rewards program. Based on our merchandising and marketing plans, combined with the expected impact of REDcard rewards and our newly completed remodel program, we expect Target's fourth quarter comparable-store performance will be the best of any quarter in the last three years." (Target would have to achieve same-store growth above 2.8 percent to achieve this goal.)
Target is looking for its REDcard program to boost fourth quarter sales by one percent. The chain believes it can get a two percent boost from the program in 2011. REDcard holders get five percent off every purchase made in the company's stores and on target.com.
David Heupel, a senior equity portfolio manager with Thrivent Financial, said Target's REDcard program is unique in retail and will be a draw for the chain this holiday season.
"When you look at the [third] quarter, there's not a whole lot that was exciting," Mr. Heupel told the Star Tribune. "So they're saying, 'Hey, we're going to throw a big fourth quarter at you.' And, let's face it, it's the money quarter. It's what matters when it comes to these stocks."
Target is also benefiting from its Pfresh concept where it has added fresh foods and expanded grocery sections in its traditional discount stores. A category director with a top-10 grocery chain recently told RetailWire that its stores in markets where Target has introduced the concept have seen some slippage.
Discussion Questions: What is your assessment of Target heading into the holiday season? Will the "unique" REDcard program build incremental sales? Where do you see opportunities for growth and what are the main challenges it faces?