Target sees Canada helping profit double in 7 years

Thu Feb 24, 2011 5:07pm EST
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By Phil Wahba

NEW YORK (Reuters) - Target Corp expects the pace of sales growth at established stores to double this year and predicted that entering Canada in 2013 and its branded credit card discount program could help it reach annual sales of $100 billion within seven years.

Target, which posted a 10.5 percent quarterly profit increase on the strength on holiday sales that easily bested those of Wal-Mart Stores Inc, estimated that its same-store sales would rise 4 percent to 5 percent this year.

The discount retailer said that offering U.S. shoppers 5 percent off purchases made on its private label credit cards, a program it began last year, would continue to be a boon.

It also credited the wider variety of fresh food in its general merchandise stores, which it calls PFresh, for part of the quarter's 2.4 percent gain in same-store sales, or sales at stores open at least a year.

Shares in Target rose 4 percent in afternoon trading.

Analysts said Target's initiatives should help it reach those goals, but cautioned the so-called "cheap chic" chain could be thwarted by the economic recovery's fragility.

Increasing same-store sales 4 percent to 5 percent this year "will probably take a pretty good consumer spending environment, coupled with PFresh and the 5 percent rewards program continuing to work," said Matt Arnold, an analyst with Edward Jones.

Target's initiatives are necessary given that "the U.S. market for the kinds of goods we sell is not enjoying robust growth," Chief Financial Officer Douglas Scovanner told investors on a call.   Continued...

<p>A Target retail store is shown in Daly City, California February 23, 2010. REUTERS/Robert Galbraith</p>