Target & Kmart tough it out

By Belinda Smart

25 Aug 2008

MELBOURNE: Victoria headquartered discount department stores Target and Kmart - owned by mixed conglomerate Wesfarmers - have released their results for the period from November 23 2007 to June 30 2008. Target's revenue for the period was $2.198 billion, with earnings before interest, taxes, depreciation and amortization (EBITDA) of $256 million, total revenue growth of 7.4 per cent and an earnings before interest and taxes (EBIT) margin of 10.1 per cent. Meanwhile Kmart's revenue was $2.454 billion, with EBITDA of $145 million, total store sales growth of 2.2 per cent and EBIT margin of 4.6 per cent.

Wesfarmers' results statement confirmed Target had opened three new stores during the period, bringing its urban outlets to 159, with a further nine currently under construction. Target Country currently operated 118 stores with a further five under construction.

Target's outlook included enhancements to its fashion offer, including the roll out of a new 'Designers for Target' program, the accelerated refurbishment of key stores, targeting increased market share, and re-positioning for the slowdown in retail spending.

External economic challenges included inflation pressures in China and the overall effect of shrinking credit markets, the statement said.

Meanwhile Kmart had suffered from tough trading conditions in the fourth quarter, with comparable stores sales declining by 0.1 per cent in the 13 weeks to June 29, driven by aggressive competitor activity and the economic slowdown. However, actions taken in the last two years had resulted in improved margins for the business, with costs well controlled.

The retailer had also implemented a refurbishment program designed to improve instore experience. During the period Kmart opened one new store and closed two, bringing the total number to 182, with a further five under construction.

The retailer's outlook included continuing to enhance its brand proposition through increased focus on customer service, product leadership, instore experience and end to end execution across all categories including fashion.

The year 2009 would see the roll out of three new Kmart stores and more than 20 store refurbishments, along with new programs designed to support the environment and community, Wesfarmers' statement concluded.