Monday, March 22, 2010

Target Corporation P-Fresh Sales "Lift" Augmenting; Round #5 of Store Checks $TGT

P-Fresh Sales "Lift" Augmenting; Round #5 of Store Checks, Stay Overweight

The acceptance and excitement level regarding Target’s fresh food offering in the Philadelphia market continues to grow and outperform expectations, in our view, based on our most recent round of store checks (5th since August) in the area. Specifically, five months into the Philadelphia market-wide (~30 stores) launch of PFresh, we believe stores are seeing a “high-single-digit” to “low-double-digit” comp lift, ahead of the company’s commentary of an incremental 6% lift in sales in Year #1, on average, across the 108 P-Fresh stores (provided at 1/21/10 Analyst Meeting). The improving trend is driven mostly by an increased # of transactions, but also from a modestly expanding basket as customers become more comfortable with Target as a one-stop shopping destination. Looking ahead, this outperformance is likely to  continue for the class of 2010 P-Fresh remodels, as the company will now deploy a market-by-market rollout (echoing its Philly strategy) to leverage marketing and training efforts. Further details from our proprietary store checks are outlined below:


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