Target is navigating turbulent economic times by polishing old stores rather than opening new ones and seeking growth in countries outside of the U.S such as Canada and Mexico.
The discount chain said Thursday that it will spend $1 billion renovating 340 stores while opening fewer than 10 new locations. The renovated stores will offer more groceries as part of a shift in focus that the company announced last year.
It's also developing smaller stores for urban markets. Target said it plans to test the concept within the next few years.
The chain, based in Minneapolis, has faced tough competition from larger rival Wal-Mart Stores Inc., the world's largest retailer. Customers had turned away from Target's "cheap chic" styles and toward retailers they believed were offering lower prices during the recession.
Quick maneuvers to change that view emerged in the form of better holiday sales as Target trumpeted its lower prices and expanded its selection of groceries, necessities that bring in shoppers more frequently.
Better-than-expected customer traffic boosted December sales by 1.8 percent at stores open at least a year. Analysts were expecting a 0.2 percent decline.
Target Corp. said earlier this month that it expects fourth-quarter earnings to "meet or exceed" analyst expectations of $1.11 per share.
Target's growth plans are similar to the strategy reiterated by Wal-Mart last October. Wal-Mart told investors that its store expansion pace overseas, particularly in emerging markets like China and Brazil, would exceed domestic growth. In the U.S., Wal-Mart is focusing on renovating its existing stores and building fewer and smaller but more efficient stores. Wal-Mart aims to use the smaller formats to further penetrate urban markets.
Target's Chief Financial Officer Doug Scovanner and other executives will speak at an investor meeting Thursday in Philadelphia.
Target's shares fell 22 cents to $50.50 in midday trading on Thursday, near the high end of its 52-week range of $25 to $51.77.
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