In Focus

Target? Bull's-Eye!

NOTE: All this week in the Chicks' Eye View we will be featuring companies based in the home state of five Chicks -- Minnesota. It's the BIG WEEK of the Chick Fest, which will also be taking place in Minnesota so we thought we'd highlight some home grown businesses. But if you're visiting God's country, beware of the mosquito.

I am in love with Target. No, I'm not kidding. If I could, I would marry it. I wish I could put my feelings into words without seeming like a real weirdo, but what the heck... like everything else lately I can just blame it on my pregnancy. See, there's just something about Target. I can easily drop $200 (that I don't have) every visit. I like their clothes, especially the kids' stuff, and their household goods are awesome. What can I say? It makes me weepy. Especially since whenever I come back to Maine for the summer, I have to go cold turkey. Believe it or not, there isn't a Target here. At least, there wasn't. Get this -- just the other day as I headed into South Portland something remarkably familiar caught my eye. It was that same old building with the red trim. I pulled over and sure enough, they're finally building a Target right here in the state of Maine! Teary-eyed, I took a deep breath and grinned.

Kinda sick, isn't it?

Target is the reason that discount shopping became acceptable for even the trendiest of trendsetters. Using the oh-so-fashionable French pronunciation "Tar-get" (rhymes with "par-lay" or "Hooray!"), suddenly everyone is shopping there. The demographics of the Target customer are extremely broad, which got me thinking... could Target be the bull's-eye in retail stocks? Let's do a little browsing and see what we can find out.

Target (TGT:NYSE), the nation's fourth-largest retailer, operates 990 stores as well as 266 Mervyn's and 64 Marshall Fields. These various stores can be found in 46 states (and, I am just giddy to report, soon to be 47!). Direct competitors include Wal-Mart and Kmart, but in this investor-weary economy, it is affected by all retail stocks, including stores like Home Depot (HD:NYSE) and Lowe's (LOW:NYSE). Therefore, the serious roller-coaster ride retail stocks have been enduring hits these guys right where it hurts. And if you were one of those believing that we'd seen the worst and that the second half of this year would be much more profitable... think again.

According to one recent article the rebound once thought to be a sure thing for the retail industry is seemingly unattainable. "While executives stopped short of lowering guidance, their comments were clearly cautious on the direction of the economy and were another sign that an economic recovery in the second half of 2001, which analysts and investors have been trumpeting for months, is hardly a sure thing... 'I've heard fewer and fewer people talk about a second-half recovery in the retail sector lately," says Jeff Stinson, an analyst at Midwest Research. 'The environment we see in the first half may be the environment we see through the second half.' " The first indicators may have come from Target and Wal-Mart, but on July 5th Federated Department Stores (FD:NYSE) announced its own earnings warnings. So what now?

Let me tell you how I see things...

Target began back in 1961 when Dayton's Department Stores decided there was an increasing demand for convenient, less-expensive department stores. So in 1962, in Roseville, Minnesota, the first discount retail store selling national brands came to fruition. In the 70's they introduced electronic cash registers and implemented an annual shopping event for people with disabilities and seniors. The 80's brought about electronic scanning and the 90's saw the Lullaby Club become a success, as well as the popular Club Wedd bridal gift registry. Before the turn of the century (doesn't that sound funny?), SuperTargets were becoming the rage; a Target that combined their usual products and services with groceries. Now the discount giant also boasts a new website, www.target.com, encompassing everything in their repertoire.

Target's philanthropic projects are many. They have been recognized for everything from being one of "America's 25 Most Generous Companies" by The American Benefactor Magazine, to being ranked number 1 among retailers for their "responsibility to the community and/or environment" by Fortune magazine. So what does all that have to do with the price of tea in China?

Well, nothing really. But let me tell you why it shows that Target will be a survivor. First, it has a history that goes back a significant number of years. In that time it has managed to remain innovative. The people behind the corporation have found the perfect balance. It is the culmination of what every shopper desires: A well-manufactured product at a lower price. Additionally, they have shown that they have a genuine concern for their employees and their surroundings. So regardless of the economy and its peaks and valleys, the bottom line is that when consumers are sitting on their wallets they're a lot more likely to open them in a Target than they are at some upscale, pricey department store. The current economic indicators show we're still in the midst of uncertainty. So while all retailers are suffering, some will feel it more than others. The fact that the entire retail industry seems to be under attack makes the minor happenings at Target a lot less frightening.

In essence, this isn't going to be more than a mere bump in the road for this company. They'll more than likely be a victim like the rest of the retail industry but my guess is they will ultimately end up... well, right on Target.