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Adding perishables to its general merchandise stores has been a boon for Target Corp., the Minneapolis-based retailer’s chief executive told shareholders last week.
Gregg Steinhafel, Target’s chairman, CEO and president, presented an upbeat assessment of its business as the discount retailer raised its quarterly dividend by 45 percent, according to published reports. But although Target is benefiting from an improving economy, it’s still taking a cautious approach to expansion. “We are taking nothing for granted,” Steinhafel said.
Target is on track to open 13 new stores this year, which Steinhafel described as the “low point” in its expansion, adding that Target will boost new store openings in 2011, according to published reports.
Target took a hit when the economy sank, because only about 40 percent of its sales come from essentials such as groceries, as opposed to 60 percent at competitor Wal-Mart Stores, Inc. But now, Bentonville, Ark.-based Walmart, a beneficiary of the recession, is struggling to hold onto customers as its main shoppers are feeling more financial strain and some wealthier patrons are returning to higher-end outlets.
Walmart reported a 1.1 percent decline in a key revenue measure for the latest first quarter, the fourth straight quarterly decline in revenue at stores opened at least a year, according to published reports. Meanwhile, Target saw a 2.8 percent gain in the latest quarter that marked the best performance in 10 quarters.
Target, which generated revenue of about $65 billion in its latest fiscal year, is less than one-quarter the size of Walmart, which had revenue of more than $400 billion.
Steinhafel said Target plans to expand and test smaller formats in urban markets, and is exploring expansion overseas for the first time. The company earlier revealed plans to open stores in Canada, Mexico and Latin America, but not for three to five years.