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Lehman Likes Target

MINNEAPOLIS-A new report by Lehman Brothers lauds Target for its sales strategies and growth potential.

By Dees Stribling | Updated on December 13, 2004

MINNEAPOLIS-So far the ’04 holiday season has been good to retail giant Target, and the prospects for the spring of 2005 aren’t too shabby either, according to a report this week by New York City-based Lehman Brothers, based on a recent meeting it had with Target management. In fact, the company is besting its rival, No. 1 retailer Wal-Mart, in an important retail metric for 16 months now, according to Lehman: Target’s comp store sales increases are consistently beating Wal-Mart, in terms of percentage growth.

“The company has had a successful holiday thus far and continues to out-comp Wal-Mart, as strength in entertainment, seasonal, and electronics has offset disappointing toy sales,” says the report, whose primary author is analyst Robert S. Drbul. Senior management attendees at the meeting included Bart Butzer, EVP stores, Target Stores; Gregg Steinhafel, president, Target Stores; Jerry Storch, vice chairman; and Doug Scovanner, EVP and CFO.

The report cites an “impressive” 3.2% November comp, and “on-plan” performance month-to-date in December, as evidence of Target’s success during the current all-important Christmas season, though it doesn’t attribute the good numbers to an extra oomph of a particular must-have item. Unlike last year, when digital cameras were the Christmas rage, there doesn’t seem to be anything quite like that in 2004.

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