On Target: Fashion, finance and philanthropyHow the discount retailer continues to wow Wall Street and entice fashionistas. NEW YORK (Fortune) -- Trendy fashions, robust finances and a 45-year commitment to charitable giving have put Target on the map. And this year, those strengths put the Minneapolis discounter on America's Most Admired Companies list for the first time. The company has long been a regular on our industry list of retailers, but this year it debuted on the main list at number 13, beating competitor Wal-Mart, which slipped from 12th place to the No. 19 spot this year. So what does it mean to make Fortune's Most Admired list? Each year, Fortune partners with the Hay Group to deliver a report card on corporate reputations. For the overall list, Hay Group asked 3,322 executives, directors and securities analysts to select the companies they most admire.
Target scored big this year. But Target's formula hasn't changed. It's continuing to do what its done for the past 45-years. Target (Charts), the child of Midwestern retailer Dayton Hudson, opened its doors in 1962, the same year Kmart and Wal-Mart (Charts) were founded. During the late '80s and '90s, Target came into its own, gaining market share as other retailers, such as Kmart and Sears (Charts), began to struggle. As the company grew up, so did its taste, making it more than a discount merchant but a destination for trendsetters. A knack for trend spotting is just one reason Target is recognized on this year's list. The company's strong financials are another. Target's stock has returned 8 percent year-to-date, 23 percent over two years, and 52 percent for the past five years. And just last week, Target announced fourth-quarter net income, which increased by 19 percent to $1.12 billion, while revenues jumped 16 percent to $19.7 billion. Consultant Retail Forward thinks the company will boost annual revenues to $95 billion by 2010. All that money, it turns out, isn't just going to shareholders and executives. Target has been giving away 5 percent of its federally taxable income to schools, non-profits and local charities since the company's inception. For the past few years, that's translated to approximately $2 million a week. Yes, a week! But in mid-February, that number hit $3 million a week. Still, it's not healthy financials and philanthropic giving that lures fashion-savvy customers into stores. That's where Target's product innovation comes in. "Target's been good at trend identification and fashion for a long time," says Bob Buchanan, retail analyst at A.G. Edwards. "But that element of the equation is much bigger now because fashion is becoming a lot faster and the discount customer is becoming more knowledgeable." The company has made a habit of promoting big name designers -and a few lesser-known ones - and sticking a pocketbook-friendly price on high-end brand names. The company's latest fashion foray - launched last year - is GO International, limited-edition lines that spotlight young, hip and global designers. In February Target launched Proenza Schouler's line - the retailer's fifth concept in the Go collection. Here's a look at what's in store from up-and-coming designers Proenza Schouler. |
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