Target Grocery StoresTarget (TGT) will further penetrate America's cities, roll out full grocery departments to more stores, invest in its REDcard savings rewards programs, and nurture its trendy-discounter edge with hip new merchandising programs like the Shops at Target, its executives told investors this week.

At the company's annual meeting, the management team also addressed shareholder complaints; among them, that Target was taking sides in the "culture wars" by selling gay pride T-shirts.

Although a "slow and uneven economic recovery" has challenged low- and moderate-income shoppers, the cheap-chic discounter, which celebrated its 50th anniversary last month, generated "the largest comp-store sales increase in more than six years" during the first quarter, CEO Gregg Steinhafel told shareholders. And its 3% comp-store sales growth in fiscal 2011 was its "strongest annual performance since 2007," he said.

Target Gay PrideThe $69 billion chain has set its sights on growing to $100 billion in sales by 2017, and it's evolving on several tracks to reach that goal:
  • Target is opening 20 to 25 new stores this year and expanding grocery departments to more units. In March, Target completed the remodels of 100 stores, bringing to 900 the number of Target stores currently offer the expanded food department, which includes fresh produce, fresh packaged meat and pre-packaged baked goods, as well as dry and frozen offerings. The retailer expects to remodel about 200 more stores this year with the fresh food layout.
  • The retailer is also counting on converting more shoppers to Target REDcard holders. The card offers users a 5% discount on all purchases. "This year, penetration [of cardholders] jumped to 11.6% ... mostly coming from debit-card holders, which increased spending with us 50% once they received their cards," Steinhafel said.
  • Target is wooing urban shoppers with the expansion of its CityTarget format to cities such as Los Angeles, San Francisco and Seattle.
  • And it's taking its brand overseas for the first time with the first Target Canada next spring.
  • Beyond store expansion, the company will continue to put the Tar-zhay in Target, building on its trendy, proprietary designer partnerships, such as the Missoni fashion line -- demand for which crashed its website last year.

The Shops at Target, for one, which launched last month, reflects the company's partnership with independent specialty stores to offer affordable versions of those boutiques' products.

The series of revolving shops -- one if Target's biggest merchandising programs in years -- currently includes five chosen for their uniqueness, design-acumen or tony sheen -- from The Webster, a Miami-based boutique that sells luxury apparel, footwear and jewelry, to Boston's Polka Dog Barkery, a canine accessories shop. A new set of featured shops will take their place in September.

Today, Target's "10 owned and exclusive brands generate $1 billion each, and are a reason why guests shop at Target," Steinhafel said.

But the retailer will continue to employ "thoughtful risk taking" to grow its business, Steinhafel said. It's an approach one shareholder took issue with at the meeting, accusing the chain of joining the "culture wars" by selling gay pride T-shirts. The shirts raised money for a group working to defeat a gay marriage ban in Minnesota.

Target would better serve the interest of shareholders by "not getting involved in the hot button, cultural issues," the shareholder said.

Executives disagreed, and Steinhafel fired back: "I can assure you that this board has our shareholders in mind... [You're taking] an unfair shot at a team that works so hard to deliver a great guest [shopper] experience."

Kathee Tesija, executive vice president of merchandising, said Target was just giving shoppers what they wanted. "We were asked by our team members and our guests to carry pride merchandise. This year, we decided to carry a limited assortment online [of gay pride T-shirts] only to address that request."

Target's website now says those T-shirts, marketed to recognize June as Gay Pride Month, had sold out, and that the inventory would not be replenished.

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If Target wants to sell marriage equality shirts, there is a market for it. There is probably also a market for
people who don't believe in gay marriage.

I can understand how some people don't like retailers to get involved in such issues...should Target sell pro-life t-shirts and pro-choice t-shirts? Hopefully, the answer to that question is no.

Two years ago, Target gave money to an anti-gay marriage Republican candidate for Governor and caught a bunch of bad pr from the gay community and their own employees. I think in time this issue will go away as the Supreme Court will decide on the subject sooner or later. Then we won't have to take time to blog our thoughts on an important social issue but others care (oh yeah, the Supreme Court will decide that one, too). It seems every issue lately is facing court tests since the political parties can't seem to agree on anything...then either, can the Supreme Court in its 5-4 decisions. Maybe that could be a t-shirt, too...5-4 Bush v. Gore.

Target could offer political retro or nostalgic designs to appeal to baby boomers. I don't think the"John Edwards for President" would be a big seller. How about "Nixon's The One" and "I'm not a Crook" in memory of Watergate.

I always liked the bumper sticker "Don't blame me...I voted for McGovern" -- I'd love a t-shirt of it! I'd even wear "Don't blame me, I voted for Gore" although I preferred former U.S. Senator Bill Bradley over Al that year. I even voted for Dukakis as well as Carter, Obama, Clinton twice... and who could forget Mondale/Ferraro?

June 19 2012 at 9:05 PM Report abuse rate up rate down Reply

target treates there employes like crap. 4 people for every one position. who cares about the gays they should start caring about there employes, My wife works there and theres a lady that cant even speak english getting more hours then her. only in cali.

June 19 2012 at 7:43 PM Report abuse +1 rate up rate down Reply

why dont they concentrate on treating there employes better. My wife works there, 9 dollers an hour 12 hours a week no health coverage treated like crap. she would quite if we dident need the grocery money. What a joke target is now, Who gives a **** about gay pride worry about your employes well being.

June 19 2012 at 7:32 PM Report abuse +1 rate up rate down Reply

Yo, yo, yo, yo, homies Target now be 'cept EBT. It free to swipe you EBT at Target! Word. I know right. Word. Yo, yo, yo. Use yo' EBT at Target word. I know right. Word.

June 18 2012 at 4:11 PM Report abuse +1 rate up rate down Reply

I used to shop at j c penneys but no longer, cross target off my lis now also. I will not support a political or social issue bu shopping there. Stores should be nuteral and stick to business.

June 17 2012 at 12:28 AM Report abuse rate up rate down Reply

I will resume buying at Target when the announce when the "Heterosexual Pride" day will be celebrated. I mean really, how many people out there care that I am not gay? Anyone? It is really time for businesses in the USA to stop trying to tell me what my tolerances need to be. Apparently the government has decided it is going to do that.

June 15 2012 at 11:51 PM Report abuse +4 rate up rate down Reply

It's not a gay or straight issue, for me. I dislike, when a business gets involved in social issues, whether I agree or not. Retailers and manufacturers should be neutral on all social issues. This way they offend no one and it's good for business.

June 15 2012 at 11:43 PM Report abuse +3 rate up rate down Reply
Oh Great One!

Target rocks, and I'm happy to shop there.

June 15 2012 at 8:16 PM Report abuse -5 rate up rate down Reply

I could care less whether anyone is Gay, but my thousands of dollars per year purchases at Target will now go to Wal-Mart because of Targets decision to join the culture war and not only support Gays, but Gay marriage. Naturally, Target has every right to do whatever they want, but for me and my Large family, we will shop else where.

June 15 2012 at 8:13 PM Report abuse +7 rate up rate down Reply

There are plenty of places to shop for food.....I just changed places...there are plenty of places to shop for clothing, toys household goods, entertainment...etc.....I just changed places.....this move on the part of Target has nothing to do with increasing sales....they are smart enough to know there will be loss...but to placate an group that has a mission of being MADE ACCEPTABLE to the entire populace is a very bad strategic move
that will only blow up in their faces....they should stick to supply side economics.....Leave the rest of the crap to that idiot stick Hussein....

June 15 2012 at 7:12 PM Report abuse +4 rate up rate down Reply