Target Corp. (NYSE: TGT) management must believe that holiday season sales will not lift the prospects of all its stores equally. It will close 13 of them. The figure is small compared to Target’s 1,799, but it cannot be spun as good news.
Target, like all large retailers, has some locations that perform much worse than others, and a number of locations may even lose money. On the basis, Target management is only doing what is prudent. And it may become more prudent as time passes. It has to have less than 1% of its stores that are underperforming. That argues for more store cuts in the future.
It is particularly cruel to announce stores shuttering just before the holidays. It cannot be good for morale, either among the people who work at the 13 stores or across the entire company. Target’s move could backfire. Its worried employees may believe they do not have enough job security to shop at Target, or anywhere else.
One reason Target management may have made the move is that, as it considers its future, revenue in the most recent quarter rose only 2.8% to $17.4 billion. It will face competition from the weakened Wal-Mart Stores Inc. (NYSE: WMT), which has shown recently that it will do almost anything, from free shipping to price cuts, to increase its pool of customers. And as it true with all retailers, Target cannot do anything to stop the advance of Amazon.com Inc. (NASDAQ: AMZN), which posted a revenue increase of 23% to $25.4 billion. Target can count itself as doomed in its attempts to reclaim rapid growth.
ALSO READ: 10 Brands That Will Disappear in 2016
All the large retailers are showing small signs of panic because they do not have tools to make their fortunes better. Though just 13 stores may not seem like much, it is only the beginning.
A list of the closing Target stores via CNNMoney:
- Austin North East in Austin, Texas
- Suncoast Pasco County in Odessa, Fla.
- Casa Grande, Ariz.
- Victorville, Calif.
- East Flint in Flint, Mich.
- Columbus Southwest in Columbus, Ohio
- Springfield, Ohio
- Northridge in Milwaukee, Wis.
- Superior, Wis.
- New Ulm, Minn.
- Ottumwa, Iowa
- Anderson, Ind.
- Dixie Highway in Louisville, Ky.
ALSO READ: 4 Stocks That Could Be Cut in Half by Year’s End
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
