Target Stores Will Stop Toy Sales In A Bid To Increase Profits

Target has announced they will stop toy sales, pet care items and luggage, dropΒ in-store cafes and playgrounds and remove all loss-making items as new boss Guy Russo attempts to overhaul the business.
Mr. Russo spoke at the Wesfarmers annual strategy briefing saying he has been given the task of fixing Target’s poor sales figures. Russo is the man responsible for turning K-mart into a profit powerhouse and hopes to of the same with Target.
The aim is not to close stores but rather change the way they sell. βI donβt like closing stores,β he said. βUnless there is a lease coming up in a year or two with a really bad store weβd look at it, but Iβd like to try to reset this business.β

Russo, who is a former Kmart and McDonaldβs boss said he will be focusing on getting rid of items that are not selling well and cutting waste.
He has vowed to turnΒ Target around with a $145 million restructure of the business, which will most likelyΒ lose $50 million this year due to a massive winter stock clearance and lower gross margins.
βIβve got a profit problem,β he said. βIβve got $3.4 billion worth of revenue and giving none of that back to anyone. Step one, you take $1 through the till, youβre meant to give five cents back to someone. Not zero or negative.
βIβm fortunate that weβve got that revenue. Now Iβve got to teach the team that instead of driving an Uber Black, maybe take the tram. Weβve got to get rid of costs that pre-restructure were taking 1 or 2 per cent of EBIT.β
Getting rid of times from Target will have to be done slowly and strategically as orders are done a year a before they hit the stores.
βExiting categories out of a department store needs to be done properly because youβre buying a year in advance,β he said. βBut weβll be starting by exiting toy sales. Pets will go. Luggage will go. We want to increase the volume on apparel and soft home.
βWeβll exit cafes and give that space back to apparel. There are playgrounds in the childrenβs area. If a customer wants a playground weβll suggest they go to the playground.β
Target, very much like K-mart has done, will be lowering prices to push through more volume thus reducing inventory and options and increasing stock of all-year basics. They will also stop selling items that are not makingΒ a profit.
βWe will not sell products that do not make money,β Mr Russo said. βWeβre lowering our prices to sell volume. Volume is critical to driving sell-through, lowering sourcing costs and further lowering prices.β