This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Sozzi: Target's Heart-Wrenching Issues Explained in Two Graphic Photos

Stocks in this article: FB TWTR AAPL M SNE WMT JCP SHLD BBY

NEW YORK (TheStreet) -- Yes, heart-wrenching. Target (TGT) burst into our lives in a big way in the early 2000s, showing us that great fashion for an evening out could be affordable. Sure, buying a TV was likely going to be a little more expensive at Target then mean, nasty Walmart (WMT), but that was OK as Target stores were an exhilarating shopping experience. After years of being depressed by the sloppy racks and dark lighting at J.C. Penney (JCP), Macy's (M), Sears (SHLD), and a host of defunct department stores, an entire generation welcomed a more respectable place to buy goods that probably weren't needed. Heck, this generation even emotionally connected (pre the uprising in puppy picture accounts on Twitter) with the cute Target bulls-eye puppy, Spot.

Quick aside: I believe Target needs to resurrect Spot in its national TV sports and social media marketing to reconnect with customers. You would be surprised by how puppies spread positive vibes, and social activity on Twitter (TWTR) and Facebook (FB).

As a rookie stock analyst in 2004, despite being taught to check biases at the door in the research process, I couldn't help but to be mesmerized by Target's earnings calls. New, designer threads were always being released. Housewares were on fire due to collaborations with up and coming designers. Like Apple (AAPL), there was an anticipation of what was to come next at Target, and the stock price usually benefited from that great unknown. Unfortunately, the Target of 2014 is in serious trouble, and that is not me piling on the sensationalism as to keep you on the Web page. The sad aspect here: The troubles at Target have been quietly building, and are now very present in its U.S. stores and newly opened Canadian division. Problems with culture and store layouts run so deep I wonder if Target has the balance sheet and support in the market to orchestrate the turnaround that is lurking in the weeds looking out three to five years.

Here is an overview of the problems in the U.S. stores:

Grocery: Walmart is making a hardcore push into the supermarket business via its Neighborhood Markets format, which boasts an expansive selection of fresh and dry groceries. Suddenly, Target's food layout, which was implemented in two test markets in Minneapolis in 2008 (and expanded aggressively thereafter), is visually outdated and outmoded compared with Walmart and, believe it not, traditional grocery stores that have upped their games.

Electronics: The most horrifically presented department in Target in my opinion. It's a true afterthought, which is alarming given the outlook for growth in new area of technology (wearables, 4k televisions, etc.). This summer, Walmart will begin re-formatting its electronics department layout to make it easier to shop, as well as to offer a broader plate of goods relative to Target. Best Buy (BBY) will have hundreds of new shops from Sony (SNE) and Samsung prior to holiday 2014 with personalized customer service that bolsters the chance of a closing a sale on the spot. Target has none of this, but you could get an exclusive white Pebble watch. Umm, yeah.

Home: Good ol' J.C. Penney suddenly is staying in business and has 500 easy-on-the-eye shops properly merchandised and promoted. Target has a sloppy home goods section with a few Nespresso end-cap shops appearing of late.

The interesting aspect is that Target's troubles, from a Canadian supply chain to tired U.S. stores, could be shown in two simple photos. No need for an epic slideshow ...l ess is often more.

Here is what Target's overhyped apparel section has become, while other department stores are remodeling changing rooms (more light plus greater size) and adding mannequin innovation.  Full of emotionless displays, oftentimes both the men's and women's assortments are under-inventoried.


The one common theme with Target Canada: out-of stocks creating zombie shelves throughout the store.  The out-of stocks are not really demand driven; Target just doesn't have its operations structurally sound yet.



-- By Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

 

-- By Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff. At the time of publication, Sozzi had no positions in the stocks mentioned, although positions may change at any time.

At the time of publication, Sozzi held no position in the stocks mentioned.

Brian Sozzi is the CEO and Chief Equities Strategist of Belus Capital Advisors. He is responsible for developing and managing an equities portfolio of mid- and large-cap positions, in addition to leading the firm's digital content initiatives. He is also a personal finance columnist for Men's Health magazine.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs