About TCC COOKING CO.

Purveyor of all that is cheap, yet chic, Target is the US's #2 discount chain (behind Wal-Mart). The fashion-forward discounter operates some 1,790 Target and SuperTarget stores across North America, as well as an online business at Target.com. Target and its larger grocery-carrying incarnation, SuperTarget, have carved out a niche by offering more upscale, trend-driven merchandise than rivals Wal-Mart and Kmart. Target also issues its proprietary Target credit card, good only at Target. The company is growing its grocery business and aggressively expanding stores. It entered the Canadian market in 2013 with 124 stores but pulled out in early 2015 after failing to win over Canadian shoppers.

Geographic Reach

Operating across the US, Target's biggest markets by total sales are California, Texas, and Florida (together about 30% of total stores). The chain has 40 distribution centers. It has offices in 13  other countries to support various trading and shipping functions.

Operations

The company operates in four product categories: Household Essentials (26% of fiscal 2016 sales) offers pharmacy, beauty, personal care, baby care, cleaning, and paper products; Food and pet supplies (21%) offers dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and pet supplies; Apparel and accessories (19%) offers apparel for women, men, boys, girls, toddlers, infants and newborns, as well as intimate apparel, jewelry, accessories, and shoes; Hardlines (17%) offers electronics (including video game hardware and software), music, movies, books, computer software, sporting goods, and toys; and Home furnishings and decor (17%) offers furniture, lighting, kitchenware, small appliances, home décor, bed and bath, home improvement, automotive, and seasonal merchandise such as patio furniture and holiday décor.

Sales and Marketing

Target spent $1.4 billion on advertising in fiscal 2016 (ended January), compared with $1.6 billion in fiscal 2015. Newspaper circulars, Internet ads, and media broadcast made up the majority of the company's advertising costs. The vast majority of its merchandise is distributed to Target stores through its network of 40 distribution centers. It also market its products online.

Financial Performance

The company has seen steady growth in revenues over the last decade and achieved its historic milestone of $73.8 billion in fiscal 2016.
 
Revenues grew by $1.2 billion in fiscal 2016, reflecting a 2% increase in comparable sales as a result of strong growth in signature businesses; a 30% growth in digital sales; and the contribution from new stores, partially offset by the sale of its pharmacy and clinic businesses.
 
For the first time in last 10 years the company reported a net loss of about $3.6 billion in 2015 due to discontinued operations in the Canadian market (resulting in a pretax impairment loss and other charges), partially offset by higher revenues. However in 2016, the company bounced back strongly and reported net income of $3.3 billion.
 
The net income increase was primarily due to higher revenues and the absence of loss from the exit of Canadian market, which the company incurred in 2015.
 
In 2016 target's operating cash flow increased by 32% due to net income reported by company in 2016 and a drop in cash used in inventory.

Strategy

Target was attracted to Canada's relatively-healthy retail market, which presented ample opportunity for growth. It entered the market by purchasing 124 stores from failed retailer Zellers, a move that seemed prudent but actually saddled the Canadian unit with inconveniently located stores that weren't built for Target's well-known layout. Opening so many stores at once in a brand new market strained the company's logistics infrastructure and left Canadians staring at empty shelves. Then big box big gorilla Wal-Mart defended its hard-won gains in the country by slashing prices and Target's hopes for the Great White North were swept away in a blizzard of red ink. The company took a huge $5.4 billion write-down in 2014 and will take another $275 million in losses in 2015 to shutter the operations and close 133 stores. Cash costs to wind down the Canadian operations will be between $500 and $600 million.

Perhaps as a result of its failed Canada expansion, Target in late-2015 sold CVS Health its pharmacy and clinic operations for $1.9 billion. As part of the deal, CVS acquired more than 1,600 pharmacies from Target in 47 states and will operate them under the CVS name in Target stores. CVS will also operate branded pharmacies in new Target stores that offer pharmacy services. Target plans for its profit margins to rise following the deal.

Going forward, the retailer’s differentiation in the marketplace will be driven by a shopping experience that is centered on ease and inspiration, with mobile serving as the front door to all of Target. The retailer also plans to reassert its cultural leadership. In addition, Target plans to create a headquarters team that is more agile, efficient, and guest-focused.

Target’s transformation roadmap includes a focus on areas like continued enhancements in technology, supply chain, and inventory management to create a shopping experience rooted in ease and inspiration; Style, Baby, Kids, and Wellness are being prioritized and will be the merchandise categories. It also plans to  create a more guest-centric experience by offering more locally relevant products, and taking demographics, climate, and location into account.

Another key to Target's strategy has been its proprietary credit and debit cards (REDcards, collectively), which encourage customer loyalty and drive sales. Use of the cards for store purchases more than doubled from fiscal 2010 (about 6%) to fiscal 2014 (nearly 20%). In late 2013, however, a data breach at the company resulted in the personal information of some 110 million customers -- including some 40 million credit and debit card accounts -- being compromised. Target saw significantly weaker sales after the breach became public, and cashiers temporarily stopped asking shoppers if they would like to participate in the REDcard program. In a bid to rescue its image and its business, Target announced plans to invest some $5 million in new security measures and offered guests a free year of credit monitoring and identity theft protection. Its chief information officer resigned and Target is facing more than 80 civil lawsuits filed on behalf of its customers, payment card issuing banks, and shareholders, as a result of the breach.

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TCC COOKING CO.

1000 Nicollet Mall
Minneapolis, MN 55403-2542
Phone: 1 (719) 272-2600
Fax: 1 (719) 272-2624

Stats

  • Employer Type: Public
  • Marketing Coordinator: Roseanne Argueta
  • Assistant Buyer: Rachel Lindau
  • Ecommerce Marketing Analyst: Anna Snapp

Major Office Locations

  • Minneapolis, MN