Target still confident about Canada, despite soft initial sales
TORONTO, Oct 29 (Reuters) - U.S. discount retail chain Target Corp said on Wednesday it expects to recover from initial stumbles in its ambitious push into Canada and still hit long-term growth targets.
Canada is still key to Target's growth over the next five years, executives said. While the company's near-term outlook remained cautious, Chief Financial Officer John Mulligan said the retailer was expecting three to four percent total annual sales growth through 2017.
It was also maintaining its long-term, 2017 earnings per share target of $8.00 and dividends per share of $3.00.
Target, which will have 124 Canadian stores by the end of its grand opening year, said a shortfall in sales was the biggest issue in Canada. That shortfall, combined with additional investments to improve operations in Canada, is putting near-term pressure on earnings.
Executives, speaking at a special meeting with analysts in Toronto, said it was investing in technology and other tools to help improve stocking and supply chains, a key complaint among Canadian shoppers, as well as changing customer perception on pricing.
"2013 has been a year of milestones, learnings and challenges for the Target Canada team," said Tony Fisher, president of Target Canada.
"And while sales are below our initial expectations, our progress to date gives me a tremendous amount of confidence in our ability to meet our long-term goal of $6 billion in annual sales by 2017."
Fisher said Target was not satisfied with initial results, and that it was determined to have a strong holiday performance in the fourth quarter.
Target, which is planning to open some 25 more Canadian stores by 2017, noted that some U.S. border stores have been impacted from the Canadian store openings.