Target Aims ‘P-Fresh’ at Philly

JON SPRINGER

MINNEAPOLIS — Target's “P-fresh” grocery concept is making its way to Philadelphia.

P-fresh — or “prototype-fresh” — is Target's name for renovated discount stores with extra floor space devoted to groceries, including produce, meats and bakery items. The retailer has rolled out the concept to about 40 stores so far, mainly in the Minneapolis area. Officials last week said the concept would be introduced to 30 stores in the Philadelphia region over the next few months.

Speaking in a conference call discussing quarterly results last week, Gregg Steinhafel, president and chief executive officer of Target Corp., said p-fresh departments have exceeded expectations, although the performance of specific locations has varied due to the size of the expansion.

“In some cases where we're expanding our food footprint by 200%, we're seeing a much larger increase than in more recently built stores where the increase in food is much less than that,” Steinhafel explained, saying the sales gains have ranged between double-digit increases and “mid-single-digit” gains. “But the overall performance has been very, very solid.”

Target's net earnings of $594 million for the second quarter, which ended Aug. 1, were down 6.4% from the same period last year, but the figure was higher than the retailer or Wall Street had expected. Target officials credited gross margin improvements and reductions in costs, including lower transportation expenses. Sales of $14.6 billion were down by 2.7%, and comparable-store sales were down 6.2%, as store traffic slowed and sales of discretionary items fell as the result of the economy.

According to Kathryn A Tesija, senior vice president of merchandising, Target's customers are cutting back on discretionary trips and shopping more for needs than for entertainment. As a result, health care, food and beauty categories delivered comparable increases.