Target: Canada Stores Could Push Sales to $100B
A Target Corporation executive on Tuesday said that the company's previously announced plans to expand into Canada could help it dramatically increase revenue and nearly double earnings within about six years.
At a retail conference, Chief Financial Officer Douglas Scovanner said that as the company moves forward with its expansion into Canada, it hopes to reach sales of roughly $100 billion-and earnings of about $8 per share-by 2017. The company reported revenue of $67.4 billion in its most recently completed fiscal year.
Scovanner said that Target plans to open an initial wave of 100 to 150 stores in Canada during 2013 and 2014; within five to 10 years after that, he expects the company to have more than 200 stores in the country.
Scovanner also said that Target's REDcard program, through which users receive 5 percent off of purchases at stores and via the company's Web site, has already proven to be a success, and will continue to help the company grow. And Target expects to see “modest underlying same-store growth” domestically, as well as some new store growth, including its City Target model, which includes smaller-format stores that the company plans to roll out in major cities.
Target last week said that its March sales were down as expected due to the late Easter holiday, but the decrease was smaller than analysts expected.
In January 2010, the Minneapolis-based retailer said that it was eyeing international expansion within the next five to 10 years-and it named Canada, Mexico, and Latin America as possible expansion sites. The company in October confirmed that it plans to expand to Canada, marking its first expansion outside of U.S. borders.
In January, Target said that it had taken tangible steps toward its expansion: It agreed to pay about $1.8 billion to take over the leases of up to 220 sites that were operated at that time by Canadian retailer Zellers, Inc.
The company's stock price jumped more than 2 percent to $50.44 on Tuesday afternoon following Scovanner's announcements.
Target serves customers at 1,755 stores in 49 states nationwide and on its Web site. It is Minnesota's second-largest public company.