Target to Expand in Oklahoma

Zacks

In an effort to strengthen its operational roots in regions where it generates strong sales, Target Corporation (TGT), the operator of general merchandise and food discount stores in the United States, announced the opening of a new store in Lawton, Oklahoma.

The new 135,000 square feet store is slated to open in July 2013 and would hire 200–250 employees. So far, the company has announced its plans to open 13 Target stores in 2013.

The company earlier revealed its plans to introduce smaller-format stores called CityTarget, similar to that of its biggest rival, Wal-Mart Stores Inc. (WMT). We believe that the approach will help the company augment its sales by enhancing its accessibility to the country’s thickly populated urban regions and space-crunched cities.

Alongside, Target is seeking promising expansion opportunities in international markets such as Canada and Latin America. The company plans to open 125 to 135 stores in Canada by 2013 and 2014 as a result of the acquisition of leasehold interest in Zellers’ stores. Target remains on track to open its first store in Canada in 2013.

The opening of stores outside the United States will boost the company’s top and bottom lines and improve its cash flow generation capability. The move would auger well for the company, helping it exceed $100 billion in sales and drive earnings per share growth at a CAGR of approximately 10% to 12% per year, resulting in annual earnings of over $8.00 per share or more by 2017. The company also expects to achieve annual growth of 3% in comparable-store sales on an average.

Minneapolis, Minnesota-based Target Corporation operates through 1,782 stores in 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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