Discount Chain Target Turning Heads In Northeast

Colleen Luisi ignores Wal-Mart, skips Kmart and doesn’t bother with any of the other discounters. She shops just one place: The nearest Target store.

“I’m there about two or three times a week,” said Luisi, a nanny for two children in Culver City, Calif., who buys everything from videos to shoes to cleaning supplies at Target.

“They have pretty much everything I need.”

Target, a unit of Minneapolis-based Dayton Hudson Corp., has swept across much of the U.S. Now it’s taking aim at the Northeast’s crowded retail market, counting on winning loyal shoppers like Luisi. If it does, weaker rivals may get shoved aside and even retail giants Wal-Mart Stores Inc. and Kmart Corp. could feel new competitive heat.

No one could be happier about Target’s Northeast expansion than Dayton Hudson and its shareholders. Dayton Hudson stock has more than doubled in the past 12 months, partly on Target’s profitability. The shares rose 1/8 to 58-5/8 after touching a record 59-1/2 earlier in the day.

Target gives Dayton Hudson more than 70 percent of its earnings. In the first quarter, Target’s profit before taxes and interest expense rose 88 percent to $251 million, as sales jumped 14 percent to $4.25 billion.

The company plans to open about 65 to 70 Target stores each year, with as many as half of them in the Northeast. The chain now has about 750 stores in the Midwest, South and West, compared with 1,945 U.S. stores for Wal-Mart and 2,134 for Kmart.

As it heads to the country’s most crowded region, Target, which opened its first store in Roseville, Minn., in 1962, will stick with what works: a more polished appearance than most discounters, including shiny floors, wide aisles and better lighting. Perhaps to contrast it with its rivals, Target shoppers sometimes give the chain’s name a pseudo-French twist and pronounce it “Tar-zhay.”

“If it’s not upscale, if it’s not clean, if it’s not shiny, if it’s not quality, if it’s not trend, then somebody in the organization says, ‘That’s not who we want to be,”’ said Bart Butzer, former regional senior vice president of Target.

Some stocks that moved substantially or traded heavily Friday:

NYSE

Silicon Graphics, up 2-1/16 at 25-5/16

The company returned to profitability, reporting earnings that beat Wall Street expectations for its fourth quarter ended June 30. Silicon Graphics, based in Mountain View, Calif., is a leading maker of workstations, which are powerful business computers.

Gateway 2000, down 2-11/16 at 40-1/2

Compaq Computer, down 5-1/4 at 135-5/8

Dell Computer (Nasdaq), down 7 at 163

Gateway matched Wall Street earnings forecasts for the second quarter and projected a strong second half, but computer shares fell when analysts said they were disturbed by some aspects of Gateway’s results. Gateway, of North Sioux City, S.D., turned over its inventory about 11.7 times in the second quarter, compared with 18.2 times in the same period last year.

Texaco, up 1-3/4 at 113-1/4

The White Plains, N.Y.-based oil company announced a 2-for-1 stock split and a 5.9 percent increase in its dividend. The new shares will be issued Sept. 29 to shareholders of record Sept. 11. A quarterly dividend of 90 cents for each pre-split share, up from 85 cents, will be paid Sept. 10 to shareholders of record Aug. 5.

NASDAQ

Firearms Training Systems, down 5-5/16 at 7-1/16

The Suwanee, Ga.-based maker of interactive firearms training systems reported lower-than-expected quarterly earnings and expects its year-end results to be weighed down by delays in orders from the U.S. military.

Hybridon, down 1-5/8 at 3-1/8

The Cambridge, Mass.-based company stopped development of a new AIDS drug after reviewing data from a clinical trial.