MINNEAPOLIS -- Target's food sales are growing faster than its general merchandise sales, according to Robert Ulrich, the company's chairman and chief executive officer.
Speaking at a press conference following the retailer's customarily terse annual shareholders meeting, held May 18 at the Minneapolis Art Institute, Ulrich said SuperTarget will represent about 25% of company growth in the future, using a 175,000-square-foot prototype.
The retailer is also boosting food in its discount stores through a consumables section it began rolling out last year in its P2004 stores. Initiatives to expand this area, which has cases for refrigerated foods and 50% more shelf space devoted to such things as beverages, dry grocery, candy and lunch-box items, are in the works. Target also plans to have 400 stores selling liquor and wine by year-end.
Not everyone is pleased with Target's growing food business. A small contingent from United Food and Commercial Workers Local 789 protested outside the meeting, wearing red shirts reading "Target Organizing Project."
Susan McKee, a worker at Rainbow Foods, a subsidiary of Milwaukee-based Roundy's, said she wants Target to "provide affordable health care and a living wage." She was handing out fliers alleging Ulrich earns $19,050 per hour, while the average Twin Cities Target cashier makes $8.10 per hour.
Inside, Target was riding high on a stellar first quarter.
Douglas Scovanner, chief financial officer, pointed out that, considering the analyst consensus estimate of $2.55 to $2.60 in earnings per share for 2005, Target should end the year with "somewhat higher [price-to-earnings] ratio than Wal-Mart, the first time this has occurred in the 11 years I've been with the company."
Transactions are up 2% to 3% in stores open at least a year, another high point in the past decade, Scovanner added during a press conference following the meeting.
Target exceeded earnings by 2 cents, posting a 14.4% rise in net income to $494 million, or 55 cents, from $432 million, or 47 cents, a year ago. Target shares were trading at $51.16 Wednesday, while Wal-Mart shares were near a two-year low, at $47.33.
Ulrich was bullish on the company's growth prospects, saying the company could more than double the number of stores in the U.S. over the next decade while tripling sales volume.
