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Target on Store Expansion Spree

WMT TGT

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Target Corporation (TGT - Analyst Report), the operator of general merchandise and food discount stores in the United States, announced the opening of two new stores, one each in Alameda and Pomona in the state of California.

The move is consistent with the company’s strategic initiative to consolidate its position in regions where it generates strong sales. Moreover, the expansion of its store base will facilitate it to effectively penetrate into its target markets and gain a competitive advantage over its peers.

The newly announced 140,000 square feet stores are slated to open in October 2013 and would hire 200 employees for each store. So far, the company has announced its plans to open 16 Target stores in 2013.

Apart from expansion, Target is also focusing on enhancing the shoppers’ experience through store renovations, which in turn facilitates it in improving store sales productivity. The company plans to  sustain its remodeling program at existing general merchandise locations, which include an expanded grocery offering, improved store layout and enhancement of in-store shopping experience across departments, such as apparel, home, beauty, shoes, and baby.

Alongside, Target is seeking promising expansion opportunities in international markets such as Canada and Latin America and revealed its plans to introduce smaller-format stores called CityTarget, similar to that of its biggest rival, Wal-Mart Stores Inc. (WMT - Analyst Report). The company will open its first store in Canada in 2013.

Going forward, Target’s efficient marketing, multi-channel strategy, innovative product offering, compelling pricing strategy, new merchandise assortments and strengthened store base are expected to drive comparable store sales and operating margins over the long term. The company expects low single-digit increase in December comparable store sales.

Minneapolis, Minnesota-based Target Corporation operates through 1,782 stores in the U.S. Currently, we prefer to have a long-term Neutral recommendation on the stock. Moreover, Target holds a Zacks #3 Rank, which translates into a short-term Hold rating.

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