Target stores in Irvine and Orange are part of a $7 billion plan by the retailer to boost its bottom line after weak fourth-quarter earnings.
The company will remodel more than 600 of its 1,800 stores, speed up its expansion of small-format stores and launch new brands.
Three locations in Los Angeles and Orange counties will get full remodels. Several new stores are due this year.
In August, Target announced that Irvine would be the home of its first flexible-format store in Orange County. The store, in a 20,000-square-foot space formerly home to a 24 Hour Fitness, will open in July.
In December, the chain announced plans to bring a second flexible-format store to Orange.
That mini-Target, at 41,700 square feet, will be in a former Ralphs that has been vacant for two years. It will open in October, Target said.
The smaller locations are aimed at growing Target in urban areas and college campus markets.
Target already has 32 flexible-format stores and plans to open more than 100.
In Orange County, the Target at 2191 N Tustin St. in Orange will undergo a full remodel, due to be completed in late October.
The $7 billion investment from Target comes after fourth-quarter profits decreased 43 percent. Target typically spends about $2 billion a year on such capital investments.
In order to help turn the tide, Target stressed it will be especially focused this year on delivering attractive prices, even if doing so eats at margins in the short-term. Executives said they’ll be moving away from promotions, particularly on basics such as food and personal care items, and try to get back to a model focused on everyday low prices.
Wall Street investors took the news hard, sending Target’s stock down more than 12 percent, as shares in Wal-Mart, Macy’s and other retailers fell as well.
Target chief executive Brian Cornell said many of Target’s stores hadn’t been updated in years.
During the updates, the company plans to use its retail backrooms to store goods and as mini-distribution centers to allow the store to ship directly to customers. It is likely a move to compete with Amazon’s two-day free shipping services for Prime customers.
Target has seen three straight quarters of declines for a key revenue measure and declining customer counts.
Other traditional retailers also are struggling. Last Friday, J.C. Penney announced it would close up to 140 stores nationwide and relocate a distribution facility from Buena Park to the Inland Empire. Around 6,000 workers nationwide will be cut through early retirement incentives.
Sears Holdings Corp,, which owns Kmart and Sears, in mid-February announced plans to sell locations, cut jobs and sell some of its brands. In January it announced it would close 150 of its 1,500 stores.
Sears owns much of its retail real estate, which analysts have speculated is worth more than the brand.
Macy’s also recently announced that it would be closing 100 stores.
Target competitor Wal-Mart Stores, on the other hand, posted another quarter of higher customer traffic and same-store sales as its efforts to merge its online services with its stores have clicked.
Cornell said Target’s results reflect “rapidly changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores.”
Target has also announced the launch of a dozen new private-label brands for home and apparel, hoping to add $10 billion in sales in the next two years.
Target’s Cat & Jack children’s clothing brand is on track to generate $1 billion in sales in its first year.
Target reported earnings of $817 million, or $1.46 per share, for the three months ended Jan. 28. Shares of Target fell $8.26, or 12.3 percent, to $58.65 in trading Tuesday.
The Associated Press contributed to this report.
Contact the writer: hmadans@ocregister.com or Twitter: @HannahMadans
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