MINNEAPOLIS - Target Stores here said last week it is expanding food to 34 gondola sides per store at some general merchandise locations, up from its norm of 24 to 26.
The expansion will encompass increased assortments of the categories it already carries - dry groceries, dairy and frozen foods - rather than a move into fresh products, Gregg Steinhafel, president, told analysts during a conference call to discuss financial results for the first quarter that ended April 29.
He said the company has only a limited number of stores with 34 sides of food, though that number may rise to 50-75 locations by the end of the year.
Asked whether Target plans to re-merchandise stores with 24 food sides to accommodate 34 sides, Steinhafel replied, "This is a going-forward strategy only at this particular time, and we'll evaluate it to see at what point in time it makes sense to go back and remodel stores."
He said Target has no current plans to remodel stores with 24 food sides. "[At this time] we're very pleased with the results ... [where] we've expanded our presence of food and other consumable products.
"We have experienced stronger increases in guest traffic, and that has led to strong performance out of those stores, [and] we're very confident a 24-sided store has the right kind of critical mass to offer our guests their fill-in grocery items and drive traffic to the stores."
According to Steinhafel, Target has approximately 650 stores with up to 24 gondola sides offering food, "and by the end of this year that number will be closer to 950 stores," he said.
A Target with 24 sides of food includes 38 cases for frozen and refrigerated product, while a 34-sided store would have approximately 96 frozen and refrigerated cases, he noted.
Target opened one new SuperTarget during the quarter, for a total of 159 locations in 21 states, with plans for three more SuperTargets during the second quarter, he said.
In a research report, Deborah Weinswig, an analyst with New York-based Citigroup, said Target "continues to improve the shopping experience with the expansion of self-service delis, broader assortments of organic and natural foods, locally grown produce, and greater availability of pre-packaged produce."
Net income for the 13-week quarter rose 12% to $554 million, or 63 cents per share. Analysts had expected net income of 64 cents, and the stock traded down on the report as some analysts lowered their outlook for the year. Sales increased 12.1% to $12.9 billion, and comparable-store sales climbed 5.1%.
