Dayton-Hudson Corp. Chairman Robert Ulrich has been preaching “The Power of One” since he took the helm at the Minneapolis-based retailer three years ago. By that he means the potential synergy of running Dayton-Hudson’s three units–Target, Mervyn’s and its Department Store Division, which includes Chicago’s Marshall Field’s–as an integrated retail powerhouse.
Not long ago, a growing number of retail analysts weren’t buying it. They urged Ulrich to spin off the mature Midwest department store business and dump struggling Mervyn’s to run its highly successful Target discount unit as a stand-alone business. The cash from a sale of the department stores could then be used to pump up the pace of Target store openings.
But with Dayton-Hudson’s stock price up to more than $61 a share from less than $23 two years ago, more and more analysts are starting to see it Ulrich’s way. Salomon Brothers retail analysts led by Jeffrey Feiner agree Dayton-Hudson is gaining economies in areas such as real estate, credit, technology and marketing.
And because all its businesses require trendy, quality merchandise, the company can use its department store buyers to tip off Target and Mervyn’s to new trends.
Salomon has a buy recommendation on Dayton-Hudson shares, with a 12 month target price of $75.
But not everyone is buying the synergy argument, including Thomas Tashjian, retail analyst with Montgomery Securities in San Francisco. “There’s a flip side to that–the difficulty of the battle between Mervyn’s, Target and the department stores who are all trying to attract the same customer.”
Brand equity: Brands are king in the apparel business. Designers know it, and so do the retailers who jockey to carry them.
Branded goods won more than half of retail dollar sales in the men’s jeans business during 1996, according to a study by NPD Group, a Port Washington, N.Y.-based marketing firm that tracks consumer buying patterns.
But there are lots of other categories where brands make a meager showing. And that’s an opportunity for new players, according to NPD researcher Sue Monk.
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Among the 48 categories surveyed, brands garnered the least market share for women’s dresses and tops. The top three brands accounted for only 5 percent of total retail dollars spent last year.
Perhaps more surprising was the lack of brand domination in men’s knit shirts, where only 8 percent of sales go to the three biggest names. Little alligators and polo players aren’t as big as they used to be.
But their retreat is providing a fortuitous opening for retailers with strong private-label offerings. Store brands dominate sales of men’s dress shirts (40 percent); boy’s slacks (38 percent); and women’s tops (37 percent).
That’s good news for department stores such as Marshall Field’s, which has entrenched house brands, as well as for general merchants such as Sears, Roebuck and Co., which is moving more in that direction each season.
On the move: Lands’ End, the Dodgeville, Wis.-based catalog company, has named Stephen A. Miles managing director of its European operations. Miles will be responsible for a distribution and phone center in Oakham, England; a phone and returns center in Mettlach, Germany, and a returns center that opened in Amsterdam last month.
Miles, who joined Lands’ End as a manager of its Canadian operations in 1993, replaces Henry Heavisides, who resigned.
Thomas Palzer has been named vice president and controller of Trans-Apparel Group, a unit of Chicago-based Hartmarx Corp.
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