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Many Former Kmart Stores Targeted By Target

Pat McLaughlin, Ellicott town supervisor, said Target has purchased the former Kmart building located in West Ellicott. P-J photo by Dennis Phillips

This year has been a good one for Target, which recently confirmed it is moving into West Ellicott.

The Minneapolis-based company reported Wednesday that its third-quarter profits rose nearly 47%, while sales increased 13.2%, both exceeding expectations.

Comparable sales grew 12.7% in the third quarter, reflecting comparable store sales growth of 9.7% and comparable digital sales growth of 29%. Total revenue of $25.7 billion grew 13.3% compared with last year, driven by total sales growth of 13.2% and a 22.3% increase in other revenue. Operating income was $2 billion in third quarter 2021, up 3.9% from $1.9 billion in 2020.

Those results have led to Target officials to continue expansion at a time when some retailers are just trying to maintain their business during the pandemic and 2021’s issues with shipping.

John Mulligan, Target chief operating officer, told investor analysts recently that Target has remodeled 145 of its stores in 2021, completing 40 remodels in just the third quarter of the year. Another 100 additional remodels are scheduled to be finished before Christmas. Target has also opened 15 new stores in the third quarter of 2021, bringing the year’s totals to 30.

Target has set its expansion sights on former Kmart locations this year. Early in 2021, the parent company of Kmart and Sears assigned five Kmart store leases to Target for properties in North Carolina, Wyoming, California, New Jersey and Maine. It was announced earlier this year that another former Kmart building in Lebanon County, Pa., will also be the home of a Target. And, in November, it was learned that the former Kmart location in West Ellicott will, at some point, house a Target.

“Among those projects, we’ve opened new stores ranging from 11,000 to 160,000 square feet, which demonstrates the flexibility we’ve developed to design the optimal store size for an individual neighborhood based on their local needs and available real estate in the market,” Mulligan said. “To increase the capacity and efficiency of our supply chain, our team has also opened two new distribution centers this year. In addition, we have two new sortation centers set to open in the fourth quarter with two more on track to open early next year. While our supply chain has had to address a host of unique challenges. I also want to acknowledge the tireless work of our construction team, which enabled them to successfully bring a huge number of store and distribution projects to completion this year.”

Target’s third quarter operating income margin rate was 7.8% in 2021 compared with 8.5% in 2020 while the third quarter gross margin rate was 28%, compared with 30.6% in 2020. Company officials said the gross margin rate reflected pressure from higher merchandise and freight costs, increased inventory shrink, and increased supply chain costs from increased compensation and headcount in Target’s distribution centers.

“While growth came from all categories, third quarter performance was led by our essentials, beauty and food and beverage categories, all of which delivered comp growth in the mid-teens,” said Christina Hennington, Target chief growth officer. “These businesses continue to deliver substantial share gains on top of last year’s gains, through both trip frequency and basket growth. In essentials, growth was led by Baby Care, pets and over-the-counter health care categories. Strength in food and beverage was most notable in our fresh and frozen categories, as well as in snacks and candy. …  Performance was strongest in swim, young contemporary, intimates, and hosiery. In home, low double-digit comp growth was led by seasonal and stationary categories and reflected record setting performance in the back-to-school, back-to-college and Halloween seasons. We have seen consistently strong results across seasonal categories, results that clearly signaled that our guests are excited to celebrate the holidays with loved ones, in new, old and re-imagined ways.”

Sales at stores that have been open for at least a year rose 9.7% in the three-month period that ended Oct. 30. That was on top of a 9.9% growth in the same 2020 span. Target reported double-digit sales growth across all five of its key merchandise categories including food and clothing.

Online comparable sales jumped 29% compared with a 155% increase a year ago before vaccines against COVID-19 became available and many Americans steered clear of indoor spaces. Some changes created by the pandemic in 2020 have become part of Target’s plan for 2021, Hennington said.

“Last year, we spread our promotions throughout the month of November and December to avoid crowding in stores, and we heard from our guests that they loved it,” Hennington said.

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