Michelle Gross Bryn Mawr ******************************************************** Target to close store on 8 Mile BY SHABINA S. KHATRI FREE PRESS BUSINESS WRITER May 23, 2003
Octavia Smith won't be able to drop by her local Target store to buy diapers and laundry detergent anymore. The 24-year-old single mother of two said she was dismayed to hear about Target Corp.'s decision to close the discount store in Detroit at 8500 E. Eight Mile Road on Aug. 2.
"We live just around the corner," she said. "It's an inconvenience because we always come here. I mean, whatever we need, I come here and get."
Smith is one of many Target customers who say they enjoy the convenience of shopping at the store near them. But the Minneapolis-based corporation said changing times and waning sales prompted the company to close that store.
Target told the store's 169 employees about the decision Thursday morning. Severance packages and jobs at other Target locations will be made available to all employees, spokeswoman Carolyn Brookter said. Employees declined to comment.
The east side Target is one of the chain's oldest and smallest Michigan stores, Brookter said. The store doesn't have the capacity to hold many of the products found in other Target stores, and renovations would be too costly, she added.
The corporation cited the store's weak financial performance and unfavorable location as the primary reasons for shutting it down. It said the store has been losing customers to the company's Northland and Eastland locations for years.
It will take time for east side Detroit resident Delano Gibbs to get used to not having a Target in his neighborhood.
"I guess I'll be forced to go to the other little stores where you probably end up paying more," he said.
Gibbs is not the only one who will be inconvenienced. Bel Air Centre, the shopping plaza where Target is located, has many vacant storefronts already. Retail giants Toys 'R' Us and Kids 'R' Us closed within the last year.
"Now we have to drive way out for Kids 'R' Us," Smith said.
Ghosts of other closed stores, including Bel Air Menswear and a Sally's beauty supply store, stand as constant reminders of the plaza's rapidly declining patronage. Cleveland-based Developers Diversified Realty, the plaza owner, was unavailable for comment.
Target, a discount chain with 1,100 locations nationwide, including 52 in Michigan, accounts for 80 percent of retail giant Target Corp.'s sales, according to Hoovers.com, an Internet research company. The chain positions itself as an upscale alternative to Wal-Mart Stores Inc. and competes with Kmart Corp., which recently emerged from bankruptcy. It closed 600 stores nationwide, 29 of them in Michigan.
But the closure of one Target store does not mean the company is in trouble. The corporation posted a 6.9-percent sales increase, to $9.983 billion at the end of this year's first quarter, compared to 2002's $9.336 billion. The nation's second-largest discounter plans on opening 94 new Target stores and 32 SuperTarget stores across the United States by year-end.
None of those stores will be opening up near Smith, or anywhere in Michigan.
She popped the car trunk and started pushing aside a folded-up baby stroller to make room for her purchases. "Sometimes we don't have time to go way out to another store," she said.
Contact SHABINA S. KHATRI at 313-222-8764 or [EMAIL PROTECTED] Copyright � 2003 Detroit Free Press Inc. http://www.freep.com/money/business/target23_20030523.htm *********************************************************** Target Corporation First Quarter Earnings Per Share $0.38
MINNEAPOLIS, May 15 /PRNewswire-FirstCall/ -- Target Corporation (NYSE: TGT) today reported earnings per share for the first quarter ended May 3, 2003 of 38 cents, compared with 38 cents in the first quarter ended May 4, 2002. All earnings per share figures refer to diluted earnings per share. First quarter net earnings increased 1.3 percent to $349 million, compared with $345 million in 2002.
"In light of our soft sales performance during the quarter, we are pleased with our first quarter results," said Bob Ulrich, chairman and chief executive officer of Target Corporation. "To continue to achieve profitable market share growth in this environment, we remain focused on maintaining operational and financial discipline and delivering even greater value to our guests."
Total revenues in the first quarter increased 7.6 percent to $10.322 billion from $9.594 billion in 2002, driven by a 9.8 percent revenue increase at Target Stores, principally resulting from new store expansion and the growth in our credit card operations. Comparable-store sales for the corporation in the first quarter 2003 declined 0.1 percent. (Total revenues include retail sales and net credit revenues. Comparable-store sales are sales from stores open longer than one year.)
For the quarter, pre-tax segment profit increased 2.0 percent to $777 million, compared with $762 million in the first quarter 2002. Pre-tax profit at Target Stores increased $56 million, or 8.2 percent. Pre-tax profit declined at both Mervyn's and Marshall Field's by $28 million and $13 million, respectively. (Pre-tax segment profit is earnings before LIFO, interest, other expense and unusual items.)
In the first quarter, the company's gross margin rate was essentially unchanged from the prior year. (Gross margin rate represents gross margin as a percentage of sales.) Expense rate, excluding credit card operations, was unfavorable to prior year due to a lack of sales leverage at all three divisions. (Expense rate represents selling, general and administrative expenses as a percentage of sales. It includes buying and occupancy, advertising, start-up and other expense, and excludes depreciation and expenses associated with credit card operations.)
Contribution to segment profit from the company's credit card operations increased to $151 million in the first quarter from $115 million a year ago. At quarter-end, gross receivables were $5.682 billion, compared with $4.246 billion at the end of first quarter 2002, due to the continued growth in issuance and usage of the Target Visa card. First quarter-end receivables balances were lower than at year-end 2002, reflecting normal seasonality.
Despite this sequential quarterly decline in receivables, the provision for bad debt expense exceeded write-offs by $8 million in the quarter as a result of the company's consistent practice of providing for projected future write-offs as receivables are created. Results of credit card operations are included in the pre-tax segment profit for each of the company's three business segments.
Other Factors Net interest expense for the quarter increased $7 million compared with first quarter 2002 reflecting higher average funded balances, partially offset by the benefit of a lower average portfolio interest rate.
The company's effective income tax rate was 38.0 percent, compared with 38.0 percent last year.
During the first quarter of 2003, the company adopted EITF No. 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor". The adoption of this guidance had no material impact on our sales, net earnings, cash flows or financial position.
Miscellaneous Target Corporation will webcast its first quarter earnings conference call at 9:30am CDT today. Investors and the media are invited to listen to the call through the company's website at http://www.target.com (click on "company/Target Corporation/investor information/webcasts"). A telephone replay of the call will be available beginning at approximately 11:30am CDT today through the end of business on May 16, 2003. The replay number is (800) 944-6998.
Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)C to the company's 2002 Form 10-K.
Target Corporation operates large-store general merchandise formats, including discount stores, moderate-priced promotional and traditional department stores, as well as a direct mail and on-line business called target.direct. The company currently operates 1,494 stores in 47 states. This included 1,167 Target stores, 265 Mervyn's stores and 62 Marshall Field's stores.
Target Corporation news releases are available at http://www.target.com or http://www.prnewswire.com .
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