Target has done pretty well for itself over the year, which is why comments last week from CFO Doug Scovanner are especially noteworthy. Speaking at the Goldman Sachs Global Retail conference, Scovanner said, “Reflecting on our performance halfway through the year, with one major exception, never have so many things gone so right across the board in each of our two business segments.”
Of course, the major exception is, well, pretty major, as Scovanner was referring to sales growth. The modest pace of sales so far has not been enough to offset prior-year weakness and get the company back to a level of productivity enjoyed during the first half of 2008.
Accordingly, Scovanner detailed two major strategies to reinvigorate sales -- the Pfresh conversion program, which adds food to existing discount stores and new 5% rewards program.
“Moving into 2011, we will continue to aggressively roll out this new concept to another wave of hundreds and hundreds of our discount stores, 340 of which were converted or will have been converted by the end of next month,” Scovanner said of Pfresh. “I would expect to convert an even larger number next year, driving incremental same-store sales from this concept well above a full point of comp in 2011 for the year.”
Another source of same-store sales growth is expected to come from the rollout next month of the 5% rewards program, which offers those who pay with their Target credit or debit cards 5% off at checkout.
Scovanner expects the program will add a full percentage point to fourth-quarter same-store sales and between 1% and 2% in 2011.